GROUP MOTA-ENGIL · URBASER GROUP MOTA-ENGIL GROUP MOTA-ENGIL · URBASER GROUP MOTA-ENGIL
#letsshifttheparadigm
Consolidated Annual Accounts 2019
YEARS IN THE SERVING OF Trusted Brand - Environment Best Waste Management Headquarters and Training POPULATIONS 2017 · 2018 · 2019 · 2020 & Collection Company · Portugal · 2019 Aveiro’s Service Center Services 2 | SUMA · Consolidated Annual Accounts 2019 Consolidated Annual Accounts 2019
SUMA · Serviços Urbanos e Meio Ambiente, S.A.
R. Mário Dionísio 2, Linda-a-Velha, 2799-557 Lisbon Registered at the CRC of Lisbon / NIPC: 503 210 560 Share Capital: EUR 12,500,000.00 www.suma.pt
SUMA · Consolidated Annual Accounts 2019 | 3 4 | SUMA · Consolidated Annual Accounts 2019 Index
Management Report 13 Profile 15 Mission, Values and Vision 15 Management policy 16 Companies 16 Organisation Chart 17 Timeline 18 Services 24 Key Indicators 25 2019 Activity 27 Economic backdrop of the year 27 Macroeconomic background 27 Waste Sector Background 27 Activity Analysis 28 Collection of municipal solid waste and urban cleaning 31 Treatment of municipal solid waste 37 Collection and treatment of industrial waste 44 International area 47 Laboratory 49 Planning and Control 50 Environmental education and awareness 51 Human resources 53 Equipment and procurement 54 Training 56 Quality, environment and safety 59 Information systems 61 Institutional image and communication 62 Economic/Financial Analysis 63 Outlook 65 Closing Remarks 66 Financial Statements 67 Notes to the Financial Statements 77 Opinions and Certifications 133 Minutes of the General Meeting 159
SUMA · Consolidated Annual Accounts 2019 | 5 6 | SUMA · Consolidated Annual Accounts 2019 Dear Shareholders,
Complying with the legal and statutory provisions to which it is subject, the Board of Directors of SUMA – Serviços Urbanos e Meio Ambiente, SA (“SUMA” or the “Company”) hereby submits for your consideration the Consolidated Annual Accounts for the year 2019.
SUMA · Consolidated Annual Accounts 2019 | 7 8 | SUMA · Consolidated Annual Accounts 2019 Message from the Chair
Dear Sirs,
2019 was the year that marked the 25th anniversary of SUMA.
This longevity, in itself, reflects an enormous understanding among its shareholders. It also reflects their wisdom in selecting and developing the best people to build human capital with high technical knowledge; the commitment to instil in them the specific knowledge of the activities to be carried out; the investment to do so in the best conditions; and a strong organisational culture, constituted by values of efficiency, ambition and innovation, transversal to all areas of the organisation, which are apparent not only on paper, but are materialised in our current work.
SUMA is the leading company and reference in the national privatised market in the management of the complete waste cycle. Its organisational model was successfully "imported" in the international markets where we are present. The credibility of the work carried out and the organisation’s investment in the best practices are publicly approved, and for the third consecutive time in the year under review, the organisation gained recognition as a Trusted Brand in the area of the environment.
However, despite sound implementation and maintaining its leadership in the domestic market, the organisation is facing a phase marked by new challenges, compounded by the crisis that started at the end of the year, which, we know at the date of publication of this report, caused, across the globe, the slowdown in human and economic activities, and will also bring lasting changes to the work context.
I believe, however, that it is also a carrier of unique opportunities for a sector that provides an essential public service.
In this context, SUMA reinvents itself using the experience of a determined management - with a view of the path taken, the current reality and the objectives it proposes -; to a workforce with extraordinary dedication and adaptability; and attentive and continuously available shareholders to support the company's path, who deserve the greatest recognition
Manuel Costa
CEO
SUMA · Consolidated Annual Accounts 2019 | 9 10 | SUMA · Consolidated Annual Accounts 2019 Message from the Chair
CHAIR Chief Executive Officer (CEO) Eng. José Manuel Mota Neves da Costa
VICE-CHAIRMAN Chief Financial Officer (CFO) Dr. Pablo Barreiro
DIRECTOR Chief Operating Officer (COO) Eng. Carlos Alberto Vaz Pinto Garcez
DIRECTOR Chief Operating Officer (COO) Eng. Rui Manuel Fernandes Soares Lopes
DIRECTOR Chief Commercial Officer (CCO) Eng. Nuno Jorge Sêco da Costa
SUPERVISORY BOARD
FULL MEMBERS OF THE SUPERVISORY BOARD
Chairman Dr. Carlos Afonso Dias Leite Freitas dos Santos
Member Dr. Inês Maria Vaz Ramos da Silva Cunha Leão
Member Dr. Pedro Miguel Pereira Gonçalves
THE STATUTORY AUDITOR PricewaterhouseCoopers & Associados - SROC, Lda. Represented by: Dr. Hugo Miguel Patrício Dias
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Organisations gain:
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#letsshifttheparadigm Management Report
14 | SUMA · Consolidated Annual Accounts 2019 Management Report Consolidated Annual Accounts 2019
Profile
Founded in 1994, with over two decades of experience in serving the environment and communities, supported by the solid foundations of its shareholder group - the Mota-Engil and Urbaser groups - SUMA has blazed a trail of leadership and entrepreneurship, and has since 1996 occupied the top position in the domestic waste sector and achieved excellence in the management of the full cycle for the different types of waste.
Standing as a reference framework in Portugal and in the international markets in which it operates, the company's organisational policy is structured on the basis of the best environmental and governance practices, reflecting an effort to achieve convergence between the emerging requirements of the sector, stakeholder expectations and customer needs, with the best efficiency solutions in the management chain and investment in state-of-the-art systems.
Its perennial capacity for adaptation and innovation, as well as its commitment to the technical capability of its human capital, have afforded the company publicly acknowledged and proven credibility, reflected both in the certifications of its management system and the receipt of various awards – the EcoPME Award - CITRUP; the National Environmental Innovation Award and the Environmental Trustmark.
Taking a proactive stance focused on the search for effective solutions, SUMA also seeks to promote active citizenship and functional environmental literacy, acting to enact change, sustainable development and social responsibility.
Mission, Values and Vision
Mission To manage waste in the construction of a better environment.
Values Focus on customers and improvement. Sustainable and safe performance. Commitment of people.
Vision Maintenance of leadership in the domestic market, in a sustainable manner. Consolidation of the business in international markets.
[Initials]
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Management policy Based on the mission, values, vision, SUMA’s Management Team establishes management policy, undertaking to lead and manage the organisation according to the following commitments and guiding principles: 1) Fulfilment of all the organisation’s obligations regarding compliance; 2) Maintenance of leadership in the domestic urban cleaning and municipal solid waste collection market, promotion of the business area of educational and environmental awareness-raising services and consolidation of the internationalisation of the business; 3) Sustained customer satisfaction, offering a range of innovative, integrated, effective and efficient waste management services; 4) Sustainable use of energy and water, pollution prevention, implementation of preventive and control measures to protect the environment; 5) Prevention of injuries and health conditions, promotion of safe and healthy workplaces, implementation of appropriate preventive and control measures to remove or reduce risks to the health and safety of workers and others; 6) Commitment of staff, professional and personal advancement among workers, matching of competences to their duties, responsibilities and authority; 7) Creation of value for shareholders, customers, workers, suppliers and other relevant stakeholders; 8) Appropriate communication to the relevant Interested Parties of both their involvement in the Organisational Culture and the mutual benefit resulting from that involvement; 9) Decision-making based on evidence, analysis and evaluation of data/information to drive achievement of the desired results; 10) Continuous improvement of the Integrated Quality, Environment and Occupational Health and Safety System, in order to improve organisational performance.
Companies
SUMA’s growth strategy has led to a strategic association of five dozen companies, which combine competences within their spheres of influence and offer multiple solutions within the context of the waste lifecycle.
The diversification and broadening of competences, achieved through the incorporation of several specialised operators, allows its activities to extend far beyond the removal and routing of waste for treatment and recovery, to the provision of complementary services, such as laboratory analysis, quality control and environmental education.
In Portugal, EGF-Empresa Geral de Fomento, SA (“EGF”) is particularly important as a flagship company at national level in the treatment of municipal solid waste (“MSW”), along with the ENVIROIL group, which operates in the market of industrial waste and boasts the largest waste oil regeneration and recycling plant in the country.
SUMA pursued its internationalisation project by transferring its competences and organisational capacity to new geographical areas, and currently has a presence abroad in 5 countries on 4 continents, Angola, Brazil, Mozambique and Oman. [Initials]
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Organisation Chart
[Initials]
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Timeline SUMA exceeds 1 million inhabitants served.
1994 Launching of a pioneering project in the field of Constitution of SUMA – Serviços Urbanos e Meio Environmental Education and Awareness, Ambiente, SA LIXOTECA® Roadshow.
1995 The municipality of Aveiro achieves 1st place in the Conclusion of the first service contract with the Clean Cities awards, the scope of which extends to the municipality of Batalha, with the award of work developed by SUMA. undifferentiated collection, collection of large objects and urban cleaning services. Incorporation of SERURb, creating synergies between the two largest domestic companies in the waste 1996 sector, gaining scale and complementing services Start of the first selective collection contract in the within the SUMA Group. municipality of Aveiro. 2002 1998 Launch of SUMA’s mobile training unit. SUMA attends EXPO’98, the last world exhibition of the twentieth century, applying an exemplary model of 2003 urban cleaning. Acquisition of the companies UTIL, STL and RESILEI, reinforcing skills and expanding the geographical 1999 scope of the SUMA group, consolidating leadership in Expansion of the company to the north, with waste the sector in Portugal, reaching the 2 million inhabitants collection and urban cleaning services being provided served by waste collection and urban cleaning, with a in Vale do Sousa – Felgueiras, Lousada and Paços de population of 700,000 on the treatment side. Ferreira. Accreditation of the analysis Laboratory under NP EN 2000 ISO/IEC 17025. Reinforcement of position in the centre of the country, with a long-term contract with Alcobaça Municipal The municipality of Ílhavo receives an award for the Council. first time in its history: 1st place in the Clean Cities awards, recognition of merit covering the activities of Management of the selective collection and cleaning of STL as company in charge of urban cleaning and the seat of the Portuguese Presidency of the Council waste collection in the municipality. of the European Union – PORTUGAL 2000. 2004 2001 Acquisition of SERURb and its affiliates by SUMA, New development nucleus of SUMA, through contracts hitherto owned by the Mota-Engil group. with Vila Nova de Gaia and Santa Maria da Feira Municipal Councils and the first provision of services in the Algarve, namely in Faro. [Initials]
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The SUMA Group achieves a 60.3% deployment Certification of the SUMA Head Office and the among the population served by private waste Aveiro/Oliveira do Bairro service centre under NP EN collection and urban cleaning operators, an indicator of ISO 9001:2000, making it the only private company in the efforts to create synergy between the various its area of activity to hold this accreditation. companies of the group (source: AEPSA, newsletter – no 13). Accreditation of SUMA by the Institute for Quality in Training in the fields of planning, design, organisation First place in the National Environmental Innovation and development/implementation of training, and the Awards for the SUMA-VLE equipment (ecopoint design of programmes, instruments and supporting container and underground container washing vehicle). material.
2005 2007 Launching of the 1st Mobile Solidarity Unit – Completion of the merger by incorporation of the REUTILÂNDIA®, which combines the environmental companies SERURb, UTIL and STL into SUMA. principles of reuse and sustainability with solidarity. Transfer of the SUMA headquarters to Parque das Accreditation of the Integrated Ultimate Waste Nações (venue of EXPO’98). Treatment Centre of Porto (CITRUP) for its NP EN ISO 9001:2000 quality management systems, NP EN ISO Acquisition of NOVAFLEX, which holds majority 14001:2004 environmental management and interests in REAL VERDE, NOVA BEIRA, occupational health and safety management NP INVESTAMBIENTE and RESIGÉS. 4397:2001 / OHSAS 18001:1999. SUMA becomes a member of the Portuguese Global 23 beaches maintained by the SUMA Group receive Compact network, an international initiative launched Blue Flags. by the United Nations to promote a more sustainable and inclusive global economy. Certification of the municipal solid waste processing plant (ETRSU) under the NP EN ISO 9001:2000 Extension of the CITRUP certification to social standard. responsibility – SA 8000 standard.
2006 Attribution to CITRUP of the EcoPME award, which Acquisition of a minority position in the ERSUC, recognises companies’ eco-efficiency and concessionaire of a multi-municipal system of the sustainability policies. municipalities of the central coast of the country. Extension of the Laboratory’s accreditation to 27 new Establishment of AMBIGERE, with SUMA holding a parameters – NP EN ISO/IEC 17025. 50% interest. This company is a member of TTRM, a complementary company grouping that managed a 2008 waste transfer and sorting contract in the Autonomous SUMA begins its internationalisation project with the Region of Madeira. conclusion of contracts in the areas of MSW collection, urban cleaning and environmental education in the province of Luanda, Angola. [Initials]
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Creation of AGIR, a company affiliated to SUMA and Implementation of GiSUMA – integrated system for the dedicated to global waste management, in Cape consultation and edition of geographic information Verde. (national georeferencing of containerisation activity and routes). Establishment of AMBIBATALHA, a company that intends to develop the waste treatment system for the Start of activity at the landfill of non-hazardous municipality of Batalha, with SUMA holding a 20% industrial waste (NHW) of Lustosa, municipality of stake in its capital, in partnership with Batalha Lousada, managed by RIMA. Municipal Council and other private agents. Inauguration of the environmental education centre in Launch of CIDADÓMETRO®, a mobile unit geared Luanda, promoted by VISTA Waste, and launch of towards awareness-raising among families. LIXOMACHIMBA® in Angola.
Assignment to the SUMA headquarters and the Expansion of the services provided in Angola by VISTA Aveiro/Oliveira do Bairro service centre triple Waste to the province of Benguela. certification in quality, environment and safety – NP EN ISO 14001:2004 and NP 4397:2001/ OHSAS Acquisition of ENVIROIL, which includes the 18001:1999. companies Correia & Correia and SRI, extending its activities from the area ofwaste oils and their The municipality of Sintra, where SUMA has been processing to the overall management of industrial operating for a decade, receives the “Clean Cities waste. 2008” award. Acquisition of TRANSPORLIXOS by TRIU, to operate Acquisition of TRIU, extending SUMA’s operations in in the industrial waste market. the industrial waste market. Constitution of CITRAVE, based on a project for the Establishment of SIGA, a company dedicated to the construction and operation of a non-hazardous waste overall management of waste in the Azorean market, landfill in Aveiro. in a strategic partnership with the Marques Group. Acquisition of EKOŚRODOWISKO, which provides Incorporation of SUMA Porto, whose purpose is to services of refuse collection and urban cleaning, snow manage the concession contract for the provision of clearing, indoor cleaning, and maintenance of green waste collection and public sanitation services in the spaces in Poland. city of Porto. Recognition of SUMA as a “Company with Exemplary 2009 Leadership” – supplement published in the Diário de SUMA celebrates 15 years of activity, a successful Notícias in November 2009, under “The 1,000 Greatest project that has laid down solid roots and assumed a Companies of 2008”. leading position in its area ofoperation. 2010 Acquisition of the first fleets of side-loading refuse Acquisition of 50% of the company GEO VISION, collection vehicles for the municipalities of Aveiro and dedicated to overall waste management in Brazil, Sintra. expanding its horizons in South America. [Initials]
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Launch of ECOSCÓPIO®, a new mobile awareness- SUMA cancels the investment made in Brazil – GEO raising unit format aimed at young people. VISION, due to incompatibility with local partners in terms of management policies and structural Launch of ECOMACHIMBA® in Angola – a mobile divergence regarding attitudes to business. awareness-raising unit aimed at young people and the adult population. 2013 Start-up of MSW collection and urban cleaning Expansion of geographical location to the operations in Sumbe, capital of the province of Kwanza municipalities of Valongo, Palmela and Évora and Sul, Angola. return to the municipality of Oliveira de Azeméis, with contracts lasting more than one year, consolidating Recognition of SUMA in the area of risk management domestic leadership. with the award of the “Especially Reliable” accolade under the “Azorean Diário Económico Risk Inauguration of facilities in Alcobaça, bringing together Management Prize” initiative. the best infrastructural conditions to raise quality standards to SUMA’s image and market position. Award of MSW collection services in the city of Maputo, to be performed by Ecolife, created for the 2011 Mozambican market. Celebration of the first contract to provide services in the City of Praia – Cape Verde. 2014 SUMA celebrates 20 years of activity and reaffirms its VISTA Waste recognised as the “Best International status as ongoing leader in the waste management Participation” at the 1st International Environment Fair sector in Portugal, expanding its operations to new in Angola. geographical areas.
Completion of the construction of the new facilities of SUMA wins the tender for the purchase of Empresa the Vila Nova de Gaia service centre, completing a Geral de Fomento (“EGF”), a sub-holding of the Águas project that aims to provide the best infrastructure for de Portugal Group (“AdP”), which manages the the development of the activity in this geographical concessionaires of 11 multi-municipal systems for the area. treatment and recovery of municipal solid waste on national territory. The process is expected to be 2012 completed in 2015. Start of MSW collection operations by AGIR in Cidade da Praia – Cape Verde. Commercial investments in the Middle East market resulted in the award of the decommissioning of six Licensing and completion of the second cell of the waste disposal sites in the province of Al Dakhiliyah, in RIMA NHW landfill. northern Oman.
Extension of services provided by VISTA Waste in SUMA’s return to Brazil, through a partnership with Luanda, developing cleaning services and Empresa Construtora Brasil (Mota-Engil Group) in the undifferentiated collection of MSW in the renovated acquisition of CONSITA. Luanda Bay, the city’s main attraction. [Initials]
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Inauguration of the first waste oil regeneration unit in awarding of urban cleaning and waste collection Portugal, through its subsidiary ENVIROIL II. services.
Presentation of the new fleet of the Vila Nova de Gaia Launch of an interactive online platform to provide Service Centre (CS VNG), which includes more than content and environmental awareness games, 40 vehicles assigned to the widest variety of refuse “Animals of the City”. collection and urban cleaning functions. Renewal of contracts in Batalha, Alcobaça and Ourém, Launch of the SUMA Laboratory website and the where the company has now been continuously SUMALAB brand. providing services for over two decades.
Creation of a customised area for raising awareness of Acquisition of the company CZAR, in Brazil, through the importance of active citizenship and the the subsidiary CONSITA, expanding activities in the environment on the MEO Kids platform. area of treatment.
2015 Construction of a non-hazardous waste treatment Conclusion of the acquisition of EGF shares with their centre in Azambuja, managed by TRIAZA. effective transfer, extending SUMA’s operations in the municipal waste treatment market, serving 60% of the The integrated management system of ECO VISION, population in Portugal. in Oman, gained certification under the three main standards: ISO 9001:2015, ISO 14001: 2015, and Award to a consortium consisting of SUMA and OHSAS 18001:2007. Tanzifco of a contract for the collection of waste, operation and maintenance of five transfer stations and 2017 operation of two landfills in south Al Sharqiya, Oman, SUMA voted “2017 Environmental Trust Mark”, public for a period of seven years. recognition of its proven credibility among the wider population. Expansion of the operations of CONSITA to the state of Rio Grande do Sul, thus exceeding the threshold of Extension of contracts between SUMA and the one million inhabitants served in Brazil. municipalities of Rio Maior and Porto de Mós until 2019 and 2023, respectively, consolidating the company’s Launch of ECO KIOSKO – an innovative structure operations in the central region of the country. designed to disseminate good practices of citizenship in a commercial and cultural context. Inauguration of a new mobile awareness-raising unit, ZOOURBANIDADE®, which, through various Installation of the interactive platform SUMAKids – characters from the animal kingdom, uses online space for the provision of environmental environmental education materials to publicise the education materials. need for good citizenship when using public spaces and facilities.
2016 Return to Parque das Nações, where SUMA’s [Initials] performance was exemplary during EXPO’98, with the
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2018 Election of SUMA as “Trusted Environment Brand SUMA voted “2018 Environmental Trust Mark”, public 2019”, for the third consecutive year, revealing the recognition of its proven credibility among the wider quality standards of operations and confidence in the population. organisation.
In 2018, new contracts were awarded, notably the Vila SUMA takes environmental education to Oman, do Conde, Coimbra, São João da Madeira, urban through technical consultancy services in this area of collection and cleaning contract. The Sintra operational intervention rental contract, the Montalegre contract for the collection of solid municipal waste and the contract with New hiring in Lagoa expands the Company's operation Figueira da Foz for the collection and washing of in the Algarve. containers. 36-month contract with LIPOR, to provide awareness SUMA rose awareness regarding selective door-to- services, equipment delivery, design and production of door collection in Valongo and Gondomar. The communication materials to promote multi-material initiative was based on a positive approach through recycling and bio-waste. proactive door-to-door contact, through which the individual and social advantages of signing-up to this CONSITA, reinforced with new contracts, is present in specific urban waste collection system are summarised the states of Minas Gerais, São Paulo and Brasília. and presented. Altogether, the contracts won by CONSITA in 2019 came to a total of 996 million reais (about 220 million SUMA established a communication strategy for 2018 euros.) based on the “zero waste” concept, in order to raise awareness of products' life cycles and individual In Brazil, CONSITA constitutes ECOSS AMBIENTAL, responsibility in the preservation of resources. a company with a specific purpose, which will develop the contract with the city of São Paulo for the execution 2019 of services on the west side of the city. SUMA celebrates its fourth century of existence, and was recognised with an award for business excellence, ECOLIFE strengthens quality of life in Maputo, by as “Best Waste Management & Collection Company – contracting MSW collection services in the municipal Portugal”, by the Business Excellence Awards. district of KaMpfumu.
[Initials]
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Services Waste management and treatment Waste Collection Design, construction and operation of Sorting Centres Municipal solid waste . Sorting centres . Undifferentiated . Mechanical and biological treatment plants . Selective . Energy recovery centres . Separative . Transfer stations Unsaleable or unwanted goods and scrap . Waste yards Green . Landfills Construction and demolition waste Management of the transport chain – prioritised Hospital waste collection Hazardous and Non-Hazardous Industrial Waste . Transfer stations . Total Waste Management . Sanitation Laboratory Analyses . Containerisation, collection and transport Water Used oils and lubricants . Analyses . Collection and processing . Sampling and transport of samples Liquid waste Treatment systems . Removal of wastewater and cleaning of drains . Environmental monitoring of landfills . Characterisation and evaluation of water treatment processes Urban Cleaning . Studies of environmental variables Urban Cleaning Waste . Manual and mechanical sweeping . Tests to establish physical characteristics . Manual and mechanical washing . Establishment of physical and chemical . Collection, maintenance and cleaning of litter bins characteristics . Weeding . Establishment of the characteristics of sludges . Vacuum cleaning and soils for agricultural use . Cleaning of fairs and markets . Establishment of the characteristics of waste for . Cleaning of gutters, ditches and drains disposal in landfills (DL 183/09) . Surface cleaning of waterways . Chemical analysis of organic soils, sludges and . Cleaning of façades and removal of graffiti organic conditioners Beach Cleaning . Manual and mechanical beach cleaning Environmental education and awareness . Disinfection of sand . Awareness campaigns . Collection, maintenance and cleaning of litter bins . Environmental education programmes . Mobile awareness-raising units . Recreational learning materials
[Initials]
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Key Indicators
267 795 261 446 263 217
83 193 68 222 53 018 12 710 13 671 7 425 (thousand euros)
2017 2018 2019 Variation 18/19
Turnover ( █ ) 267,794,784 261,446,061 263,217,062 0.68%
EBITDA ( █ ) 83,193,441 68,221,770 53,018,200 (22.29%)
EBITDA Margin 31.07% 26.09% 20.14% (5.95 pp)
EBIT 36,124,618 24,257,268 12,338,369 (49.14%)
Net operating margin 13.49% 9.28% 4.69% (4.59 pp)
Earnings before tax 24,519,055 14,303,908 2,242,821 (84.32%)
EBT margin 9.16% 5.47% 0.85% (4.62 pp)
Net income ( █ ) 12,709,684 13,670,655 7,425,253 (45.68%)
Net profitability of sales 4.86% 5.19% 2.82% (2.37 pp)
ROE 7.33% 7.53% 4.30% (3.23 pp)
Debt 66.55% 66.82% 70.89% 4.07 pp
Financial autonomy 27.09% 28.04% 24.74% (3.30 pp)
General liquidity 111.84% 106.03% 75.13% (30.90 pp)
2017 2018 2019 Variation 18/19 Municipalities served – MSW Collection and 65 69 80 15.94% urban cleaning Inhabitants served – MSW Collection and 5,661,736 6,351,389 9,052,865 42.53% urban cleaning Municipalities served – MSW treatment 179 180 180 -
Inhabitants served – MSW treatment 6,764,650 6,519,587 6,519,587 -
Average number of employees 7,108 7,150 8,626 20.64%
Tons of waste – MSW collection 1,640,827 1,579,501 1,751,700 10.90%
Tons of waste – MSW treatment 3,777,942 3,679,340 3,681,969 0.07%
Tons of waste – Industrial 222,363 259,452 284,576 9.68%
Note: activity indicators include all companies under the operational management of SUMA, even though they may not form part of the financial consolidation.
[Initials]
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2019 Activity
Global economic activity slowed down over the course of 2019, with a generalised deceleration in geographic terms, affecting advanced economies and, more pronouncedly, emerging market economies, in a context of growing commercial tensions, deterioration of confidence and increased economic and political uncertainty. The growth of the economy in Portugal exceeded estimates, but the slowdown in relation to previous periods is confirmed, influenced by the weaker growth of world trade and external demand, as well as by the less intense growth of private consumption.
The waste sector in Portugal remains far from meeting the established targets. This panorama extends to the other countries of the European Union, as none of the 28 countries is close to reaching the 17 sustainable development goals recommended for the year 2020 and, in the latest known data, Portugal is in the 15th position in this group of countries. An increase in investment in this area will be expected, supported by the Operational Programme for Sustainability and Efficient Use of Resources (POSEUR), which during 2019 promoted projects in the area of resources, selective door- to-door collection, bio-waste collection, the drying of waste-derived fuel (WDF), but also composting and innovation in the collection of recoverable materials.
Economic backdrop of the year
Macroeconomic background The slowdown in the world economy slows growth to the slowest pace since the global financial crisis. According to Banco de Portugal, the growth of the world Gross Domestic Product (GDP) decreased from 3.6% in 2018 to 2.7% in 2019, based on three assumptions – less cyclical dynamism and reduced economic growth policy stimuli in the main advanced economies, a gradual slowdown in the growth of the Chinese economy and the resilience of several emerging market economies, particularly India, Brazil, Mexico and Turkey. In the eurozone, the scenario of slowing growth is also a reality, which confirms fears of the effects of the performance of the stronger economies, which are growing again at a slower pace than the previous year.
In Portugal, GDP decelerated from 2.4% in 2018 to 2% in 2019. This evolution of economic growth corresponds to a process of maturation of the economic cycle and maintains rates above the eurozone average, driven by the dynamism not only of internal demand, but also of exports, although the latter less so. According to the data provided in the 2019 Economic Bulletin of Banco de Portugal, employment, for all sectors of activity, recorded a 2.0% change, resulting in an unemployment rate of 6.5%, half percentage point below the value recorded in the previous year.
Waste Sector Background During 2019, there was an appreciation and review of some fundamental issues for the national waste sector. Consulting both the 2019 State of the Environment Report, of the Portuguese Environment Agency (APA), and the PERSU 2020 Monitoring Report, prepared by the Water and Waste Services Regulatory Authority (ERSAR), the figures reflect an unpleasant picture in the face of demanding targets set.
The key indicators predefined by PERSU 2020 reflect, in general, minor improvements compared to last year, still remaining far from the objectives for 2020, thus making it evident that there is a need for more effort by the entities involved, going through the redefinition strategies, reconversion of technology and behaviour change, both for citizens and institutions. [Initials]
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In this sense, the PERSU 2020+ report - Strategic Reflection and Adjustments to PERSU 2020 Measures - was prepared by the APA, which establishes guidelines for adjustments to PERSU 2020, considered necessary to redirect the present trajectory towards the achievement of the new goals, established in line with the strategy for the circular economy. Although comprehensive, the report would benefit not only from the further development of some of the matters mentioned, due to its weight in the global strategy, such as the revision of the TGR, the aspects related to incentives for the production of energy from waste and the strengthening of the application the polluter-pays principle (pay-as-you-throw systems), means to promote dialogue between the various management entities involved and a greater legal and contractual framework regarding the infrastructure sharing strategy, but also with a national approach, rather than regional, for sector analysis.
Brussels established the mandatory collection of bio-waste until 31 December 2023, and, for the calculation of the recycling rate, only those collected selectively count. The collection of bio-waste is really the big national bet, which could change the Portuguese condition of non-compliance with the goal of preparation for reuse and recycling, as well as the target set for disposal of biodegradable urban waste (RUB) in landfill. It should be noted that landfills, where more than 58% of waste is placed, are being depleted in Portugal.
Activity Analysis SUMA maintains its globalised strategy and adds to its leadership position in the waste sector in Portugal, the growth of operations across borders, having consolidated investments and fulfilled the performance and growth targets set by the company’s shareholders.
Offering wide-ranging and distinctive services, SUMA Group companies serve more than 9 million inhabitants in the area of municipal waste collection and urban cleaning, and around 6.5 million inhabitants in the area of municipal waste treatment.
The range of fully-featured solutions offered for the management of the complete waste lifecycle is underpinned by a culture of creating synergies, which SUMA fosters among the three dozen companies owned on national territory, allowing it to assume the role of principal operator in the waste sector in Portugal.
As well as leadership in the collection of MSW and urban cleaning for more than two decades, SUMA also boasts the leading group in the area of MSW treatment - EGF - and invests in the incorporation of specialised companies in each of the areas, while diversifying to the market for the collection and treatment of industrial waste, where it also has pioneering companies with unique characteristics in our country.
Consolidating the activity of the group companies that provide MSW collection and urban cleaning services, SUMA has a presence in 59 municipalities with contracts of over one year, covering a population of around 2.3 million inhabitants. The group is also leader in the area of treatment and recovery of municipal waste, where EGF is the country’s leading operator, providing services to an estimated population of around 6.5 million inhabitants in 180 municipalities. When we combine both areas, at national level, we find that the SUMA group provides services in 194 municipalities to over 7.2 million inhabitants.
[Initials]
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SUMA focused on internationalisation to develop and take advantage of specialised know-how, recognised in two decades of operation, and promoted strategic partnerships in the constitution of local companies, marking its presence in Angola - Luanda provinces –, in Mozambique – Maputo –, in Brazil – in Avaré, Belo Horizonte, Brasília, Conceição do Mato Dentro, Contagem, Itapevi, Itatiba, Santa Luzia, São Paulo, São Sebastião and Sarandi –, and in Oman – in Al Sharqiyah Sul. Taken as a whole, they provide services to almost 6.8 million inhabitants.
In 2019, the SUMA group achieved a consolidated turnover of EUR 263,217,062. We have seen an increase in revenues, which are most relevant in the group of companies operating in the area of industrial waste, which contribute with an 11% increase in their turnover, for consolidated revenues, but also in the national urban services area, whose turnover to be consolidated increased by 2.7%. On Breakdown of 2016 turnover by area. Variação 2018 2019 the other hand, the MSW treatment area, with the (thousand euros) 18/19 Urban Services PT 48,714 50,032 2.71% EGF companies, as a whole, reporting lower Industrial waste PT 29,102 32,295 10.97% turnover figures resulting from the tariffs approved MSW treatment PT 171,804 169,670 (1.24%) for the year 2019, in accordance with the tariff International 11,826 11,221 (5.12%) regulations, recording a decrease of about 1.2% Total 261,446 263,217 0:68% compared to 2018. The individual business volumes of each of the domestic companies under SUMA’s control are as follows: Turnover - Portugal 2017 2018 2019 Variation 18/19 (thousand euros) SUMA 51,916 49,623 53,971 8.76% SUMALAB 3,386 1,226 1,321 7.75% SUMA Esposende 877 837 850 1.55% NOVAFLEX 1,555 1,621 294 (81.86%) REAL VERDE 767 915 939 2.62% RIMA 1,600 2,544 3,327 30.78% RESILEI 1,215 1,533 2,221 44.88% TRIU 8,268 8,891 9,038 1.65% ENVIROIL II 7,148 8,129 7,550 (7.12%) CORREIA & CORREIA 10,063 11,226 11,397 1.52% SRI 405 451 458 1.55% SIGA 658 648 756 16.67% TRIAZA 551 1,012 2,608 157.71% EGF 1,167 956 1,576 64.85% ALGAR 18,297 20,543 20,959 2.03% AMARSUL 15,562 16,976 17,527 3.25% ERSUC 23,787 24,775 23,172 (6.47%) RESIESTRELA 4,322 4,613 4,651 0.82% RESINORTE 17,262 18,748 16,543 (11.76%) RESULIMA 4,714 5,340 5,080 (4.87%) SULDOURO 9,548 9,233 8,931 (3.27%) VALNOR 10,431 9,267 9,590 3.49% VALORLIS 6,664 7,558 7,434 (1.64%) VALORMINHO 1,330 1,607 1,216 (24.33%) VALORSUL 63,976 60,153 54,246 (9.82%)
[Initials]
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In international companies that contribute to consolidated revenues, there is a decrease in the different geographies, driven by losses due to exchange rate variations. The individual companies’ turnover abroad was as follows: Turnover - International Variation 2017 2018 2019 (thousand euros) 18/19 Angola VISTA WASTE 40,657 60,001 63,198 5.33% SIGAMB 987 1,087 795 (26.86%) Brazil CONSITA 18,568 14,488 26,192 80.78% ECOSS AMBIENTAL - - 13,993 - Cape Verde AGIR 179 180 1 (99.44%) Mozambique ECOLIFE 1,254 2,707 2,393 (11.60%) Poland EKOSRODOWISKO 1 1 1 - Oman ECOVISION 8,004 10,558 10,424 (1.27%)
A key factor for this business, the analysis of the amount of waste managed, encompasses all companies under the operational management of SUMA, which also groups the EGF 2019 ; 2018 ; companies. 21% 16% 2017 ; 17% Portugal Tons of waste 2017 2018 2019 InternacionalInternational
Portugal 4,709,292 4,628,364 4,545,426 2017 ; 83% International 931,840 889,929 1,172,818 2018 ; 84% Total 5,641,132 5,518,294 5,718,244 2019 ; 79%
Total tons of waste managed increased 3.62% year-on-year, more clearly in terms of tons managed in MSW collection, by virtue of the increase in the figures achieved in international operations.
Tons of waste managed 2017 2018 2019 Variation 18/19 MSW Collection 1,640,827 1,579,501 1,751,700 10.90% MSW treatment 3,777,942 3,679,340 3,681,969 0.07% Collection and treatment of industrial waste 222,363 259,452 284,576 9.68% Total 5,641,132 5,518,294 5,718,244 3.62%
When evaluating the main activities carried out during the year 2019 through the amount of waste managed, MSW treatment stands out as the activity under which the largest amount of waste was managed in Portugal. In the international companies, during 2019, MSW collection operations continued to predominate, now with greater relevance.
Tons of Waste Managed – Portugal Tons of Waste Managed – International
RecolhaMSW Collection RSU RecolhaMSW Collection RSU 6% 15% 10% TratamentoMSW treatment RSU TratamentoMSW treatment RSU
RecolhaCollection e RecolhaCollection e andTratamento treatment Tratamentoand treatment Industriaisof industrial waste 79% 90% Industriaisof industrial waste
[Initials]
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Collection of municipal solid waste and urban cleaning SUMA’s core business since its incorporation, municipal solid waste collection and urban cleaning, serves 43.21% of the domestic population and allowed the company to maintain its leadership in this market during 2019. With contracts for the provision of collection and urban cleaning services in 59 municipalities, the following companies operating in Portugal serve 2.3 million inhabitants:
SUMA – Serviços Urbanos e Meio Ambiente, SA SUMA is the parent company of this Group and the main pillar of this organisation. A flagship company in the domestic market, its corporate purpose consists of global waste management and its main activities include the provision of municipal waste collection and urban cleaning services.
SUMALAB, SA (“SUMALAB”) SUMALAB is the new name of the company SUMA (Matosinhos) – Serviços Urbanos, SA, a company incorporated on 27 July 2000 to perform a collection and cleaning services concession contract in the Municipality of Matosinhos, which ended in 2017. The change of name, adopted in February 2019, is aimed at promoting a change in the company’s image, as after the termination of the above-mentioned concession agreement, its core business has changed to laboratory work. SUMALAB boasts an accredited Laboratory, which carries out laboratory work by providing services at national level, and fulfils an increasingly important role within the framework of the SUMA group, enabling the diversification of activities and promoting a range of complete and integrated solutions in the waste sector.
SUMA (Esposende) – Serviços Urbanos e Meio Ambiente, Lda (“SUMA Esposende”) SUMA ESPOSENDE was created on 6 December 1999, with the objective of managing the contract for the provision of municipal solid waste collection services in the municipality of Esposende, which took place in August 2003, with the transfer of this same contract from SERURb – Serviços Urbanos, Lda. To SUMA Esposende. The Company changed its initial name – SERURb (Esposende) – Serviços Urbanos, Lda. – to SUMA (Esposende) – Serviços Urbanos e Meio Ambiente, Lda., in January 2008, after the company joined the SUMA group.
NOVAFLEX – Técnicas do Ambiente, SA (“NOVAFLEX”) Established in 1993 and acquired by SUMA in 2007, its corporate purpose is integrated waste management and its core activity is the provision of municipal solid waste collection services. The main contract, in the municipality of Figueira da Foz for the provision of MSW collection and transportation services, expired on 31 December 2018 and a new contract was awarded to SUMA by the Municipality of Figueira da Foz, thus ensuring continuity in the provision of these services within the Group. In 2019, NOVAFLEX focused its activity on executing short-term contracts in the municipalities of Grândola, Loulé, Monção, Montijo, Póvoa do Varzim, Setúbal and Vila do Conde, and in the civil parish of Azeitão, São Lourenço and São Simão. For the operation of these services, the company had the support of companies in the SUMA group, in a regime of subcontracting resources and services.
[Initials]
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The SUMA group also has three companies that have ceased operations and are waiting for new business opportunities:
SUMA (Douro) – Serviços Urbanos e Meio Ambiente, Lda (“SUMA Douro”) SUMA DOURO was created on 27 July 2000 with the purpose of managing and operating of service and equipment supply contracts in the area of municipalsolid waste, within the geographical area of the municipalities that make up the Association of Local Authorities of the North Douro Valley (AMVDN), contracts that have already come to an end.
SUMA (Porto) – Serviços Urbanos e Meio Ambiente, SA (“SUMA Porto”) This company started its operation on 28 December 2008 and would develop its activity within the scope of the service provision contract awarded by the Municipality of Porto, which started on 10 April 2009 and ended on April 2017. After notification by the municipality of its intention not to renew the contract, extensions were made to it, which extended the duration until 10 January 2018, when the contract finally expired. Upon termination of the contract, the company ceased its activity and, during 2019, did not provide any service and did not have workers.
NOVA BEIRA – Gestão de Resíduos, SA (“NOVA BEIRA”) Established in 2002 with the participation of NOVAFLEX and becoming part of the SUMA group in 2007 with the acquisition of that company, since its establishment, NOVA BEIRA has been dedicated to the transport of municipal solid waste between transfer stations and the treatment centre, in the region of Guarda, an activity that was suspended at the end of 2013.
SUMA’s commercial department plays a key role in achieving the Company’s objectives. In 2019, 394 business opportunities were analysed in the national market, with 204 proposals submitted, for a total value of 96.4 million euros, with 15 proposals pending decision at the end of this year, amounting to approximately 31.3 million euros and 10 proposals are in the preliminary hearing stage, with a value of approximately 5.2 million.
In order to evaluate the commercial performance of the company, the following analysis takes into account contracts that were awarded in 2019. Therefore, the analysis includes bids that were prepared and presented in 2018 for contracts that were only awarded in 2019. The SUMA GROUP was awarded services in the year 2019 worth 24.9 million euros. Contributing to this overall total, the following awards of contract deserve special mention: . Sintra Municipal Council – Acquisition of public sanitation services with sweeping in the central area of Sintra for the period from 2019 to 2023 – Lots 2 and 4; . Lisbon Municipal Council - Provision of underground container washing and disinfection services in the Municipality of Lisbon; . Lagoa Municipal Council - Provision of urban cleaning services in the Municipality of Lagoa, for a period of 3 years; . Loulé Municipal Council - Hiring cleaning services in an area of Almancil and Quarteira, Loulé Municipality - Quarteira Nascente Lot 2; . Soure Municipal Council - Provision of municipal solid waste collection services to final destination, supply, placement, maintenance, washing and disinfection of containers; collecting “OAU”, bulky waste, carrying out environmental awareness-raising campaigns; [Initials]
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. Leiria Municipal Council - Collection and transportation to the final destination of urban waste, construction and demolition waste and urban cleaning services in the Municipality of Leiria; . Almada Municipal Council - Provision of urban cleaning services in civil parishes in the Municipality of Almada; . Benavente Municipal Council - Provision of urban hygiene and public sanitation services in the urban areas of Benavente, Santo Estêvão and Samora Correia, including Porto Alto, for a period of 16 months; . Intermunicipal Water and Waste Services of the Municipalities of Loures and Odivelas - Provision of washing service for 1100-litre containers; . Condeixa-a-Nova Municipal Council - Acquisition of urban cleaning services and collection of waste cooking oils in the Municipality of Condeixa-a-Nova;
Of the 10 bids at the preliminary hearing stage, which were submitted in 2019, four have been subject to a decision favourable to SUMA, in the value of 1 million euros.
The provision of services lasting for one year or more amounts to 33.1% of the total value of the contracts awarded in 2019.
New contracts were concluded with customers with a history of commercial relations within the SUMA Group, of which we highlight: Duration of one year or more, representing a portfolio of 15 million euros: . Sintra Municipal Council – Acquisition of public sanitation services with sweeping in the central area of Sintra for the period from 2019 to 2023; . Lisbon Municipal Council - Provision of underground container washing and disinfection services in the Municipality of Lisbon; . Loulé Municipal Council - Hiring cleaning services in an area of Almancil and Quarteira, Loulé municipality - Quarteira Nascente; . Almada Municipal Council - Provision of urban cleaning services in civil parishes in the Municipality of Almada; . Benavente Municipal Council - Provision of urban hygiene and public sanitation services in the urban areas of Benavente, Santo Estêvão and Samora Correia, including Porto Alto, for a period of sixteen (16) months; . LIPOR - Public tender for the provision of waste transportation services and operation, maintenance and surveillance of the transfer station and the Póvoa de Varzim ecocentre; . LIPOR - Provision of awareness-raising services, equipment delivery, design and production of communication materials to promote multi-material recycling and bio-waste, in the LIPOR associated municipalities (25408/2019); . Intermunicipal Water and Waste Services of the Municipalities of Loures and Odivelas - Provision of washing service for 1100-litre containers; . Condeixa-a-Nova Municipal Council - Acquisition of urban cleaning services and collection of waste cooking oils in the Municipality of Condeixa-a-Nova; . LUSOPONTE - Provision of mechanical and manual cleaning services at Vasco da Gama Bridge and 25 de Abril Bridge -2019;
[Initials]
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. Vila do Conde Municipal Council - Hiring two heavy vehicles for the hygiene and cleaning service, under an operational lease regime, for residential door-to-door extension; . AMARSUL - Acquisition of services for washing waste containers on public roads (indoor and outdoor); . University of Coimbra - Collection and transport to final destination of urban waste produced at the UC and SASUC facilities and supply of the respective surface containers; . Empresa Municipal de Ambiente do Porto, EM, SA - Operational leasing of heavy motor vehicles; . Oeiras Municipal Council - Acquisition of the provision of washing services, cleaning of waste disposal equipment - buried and semi-buried, in the continuous supply modality; . Municipal Services of Castelo Branco - Collection and transport of solid waste; . Union of the Civil Parishes of Massamá and Monte Abraão - Public tender for the purchase of cleaning, washing and waste removal services from the Weekly Fair of Monte Abraão; . Montemor-o-Velho Municipal Council - Provision of urban hygiene and sanitation services in the Municipality of Montemor-o-Velho - 2020; . Oeiras Municipal Council - Acquisition of the provision of washing services, cleaning of waste disposal equipment and Cyclea ecopoints, by division into lots, in the continuous supply modality; . Grândola Municipal Council - Operational rental of a compact vehicle designated as a mechanical sweeper with 1 driver and 1 waste collector; . University of Lisbon - Acquisition of services with a view to adequate management of waste produced by the University of Lisbon; . Montijo Municipal Council - Acquisition of services for the provision and collection of large containers; . Portuguese Oncology Institute Coimbra Francisco Gentil, E. P. E. - Integrated urban waste management service; . University of Coimbra - Provision of undifferentiated / bulky waste management services; . MEO-Serviços de Comunicações e Multimédia, SA - Collection of undifferentiated and similar urban waste, including mixed waste; . Intermunicipal Community of Alentejo Litoral - Framework agreement for the provision of washing and disinfection services for municipal surface and semi-buried solid waste containers.
Duration of less than one year, representing a portfolio of 7.2 million euros: . Leiria Municipal Council - Collection and transportation to the final destination of urban waste, construction and demolition waste and urban cleaning services in the Municipality of Leiria; . Torres Novas Municipal Council – Acquisition of services for collection, transport of urban waste and urban cleaning in the municipality of Torres Novas; . Espinho Municipal Council - Collection and transport services to final destination of municipal solid waste and urban cleaning in the Municipality of Espinho; . Vila do Conde Municipal Council - Purchase of MSW collection services, equipment washing and urban cleaning; . Oeiras Municipal Council - Acquisition of the provision of urban cleaning services in the municipality of Oeiras, in a continuous supply arrangement; . Póvoa do Varzim Municipal Council - Multi-material collection in the municipality of Póvoa de Varzim; . Benavente Municipal Council - Provision of urban hygiene and public sanitation services in the urban areas of Benavente, Santo Estêvão and Samora Correia, including Porto Alto, for a period of 5 months; [Initials]
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. Póvoa de Varzim Municipal Council - Multi-material collection in ecopoints and door-to-door in Póvoa de Varzim; . Municipal Water and Sanitation Services of Sintra - Provision of "lateral" urban waste collection services, undifferentiated in the areas of the cities of Cacém and Queluz and selective in the areas of the União de Freguesias de Sintra, União de Freguesias de S. João das Lampas e Terrugem and Civil Parish of Colares; . S. João da Madeira Municipal Council - Provision of urban waste collection and transportation services, management of the ecocentre and selective door-to-door “Green Commerce” collection, sweeping and urban cleaning; . Peniche Municipal Council - Beach cleaning and coastal cleaning services in the municipality; . Valença Municipal Council - Collection and transport of municipal solid and similar waste produced in the Municipality of Valença, supply and washing of containers and urban cleaning; . Monção Municipal Council - Collection and transport of municipal solid waste and similar materials produced in the municipality and public sanitation in the urban centre of the village of Monção; . Palmela Municipal Council - Purchase of urban cleaning/mechanical sweeping services; . Belmonte Municipal Council - Collection of undifferentiated municipal solid waste and other services in the scope of urban cleaning in the Municipality of Belmonte; . Montijo Municipal Council - Acquisition of a service to cut cane fields, pruning and felling of trees and removal of tree stumps; . Setúbal Municipal Council - Provision of services for the collection and transport of urban waste from containers, buried and semi-buried, from the Municipality of Setúbal, for a period of 2 months; . Sintra Municipal Council - Purchase of beach cleaning services in the Municipality of Sintra; . Aljezur Municipal Council - Provision of services for the collection and transport of municipal solid waste and washing of containers; . Condeixa-a-Nova Municipal Council - Acquisition of urban cleaning services and collection of waste cooking oils in the Municipality of Condeixa-a-Nova; . Barreiro Municipal Council - Acquisition of MSW surface container collection services; . Vagos Municipal Council - Acquisition of beach cleaning services at Vagueira, Labrego and Areão beaches, cleaning and surveillance of the toilets at Vagueira and Areão beaches and the Gafanha da Vagueira Picnic Park and street cleaning and sanitation; . Espinho Civil Parish Council - Urban cleaning in the civil parish of Espinho; . Cabeceiras de Basto Municipal Council – Leasing of municipal solid waste collection vehicle with crane; . Ponto Verde Serviços - Cleaning services for the following events: NOS ALIVE 2019 and MUSE; . Vila do Conde Municipal Council - Urban cleaning in the industrial area of Varziela/Beche, Vila do Conde; . Alcácer do Sal Municipal Council - Cleaning services for public spaces in the locations of Carrasqueira, Comporta and Possanco; . Terras de Bouro Municipal Council - Reinforcement of the MSW collection and transport service; . Montijo Municipal Council – Acquisition of Molok collection services with transportation of MSW to AMARSUL; . Mira Municipal Council - Acquisition of 800-litre containers; . Grândola Municipal Council - Operating leasing of 1 municipal solid waste collection vehicle with 1 driver; . Promotorres, EM - Provision of services for cleaning the Torres Vedras Carnival in 2019;
[Initials]
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. Montijo Municipal Council - Acquisition of container collection service with transport of MSW's to AMARSUL; . Grândola Municipal Council - Provision of mechanical sweeping services with driver and waste collector; . AMBISOUSA - Transport of cargo from the selective collection of the Municipalities of Paços de Ferreira, Lousada and Felgueiras; . São Brás de Alportel Municipal Council – Provision of washing services for underground and surface containers; . Penacova Municipal Council - Acquisition of undifferentiated municipal waste collection services for the Municipality of Penacova; . Nisa Municipal Council - Cleaning of MSW containers in the Municipality of Nisa, for 2019; . Póvoa do Varzim Municipal Council - Cleaning and disinfection service for MSW containers; . Ourém Municipal Council - Forwarding of urban cleaning waste - mechanical sweeping; . Grândola Municipal Council – Container washing and cleaning services for MSW disposal; . Municipal Services of Basic Sanitation in Viana do Castelo - Provision of urban hygiene and sanitation services; . Alvalade Civil Parish Council - Acquisition of services for herbicide application in the civil parish of Alvalade; . Condeixa-a-Nova Municipal Council - Acquisition of a washing and disinfection service for 800-litre containers of municipal waste in the municipality; . Vizela Municipal Council - Provision of collection, transportation and disposal of construction and demolition waste, until 31 December 2019; . Feira Viva, Cultura e Esporte, EM - Provision of street cleaning and solid waste collection services; . Marina de Vilamoura, SA - Floor cleaning in the surrounding areas of Vilamoura Marina; . Arruda dos Vinhos Municipal Council - Cleaning and disinfestation of UW containers; . Alenquer Municipal Council - Provision of urban cleaning services; . Figueira da Foz Municipal Council - Acquisition of waste cleaning services in the Old Municipal Fire Station; . Montijo Municipal Council - Provision of CDW collection services in Big-bag.
In addition to these awards, SUMA has increased its customer base by signing contracts in new municipalities, representing a portfolio of EUR 2.7 million: . Lagoa Municipal Council - Provision of urban cleaning services in the Municipality of Lagoa, for a period of 3 years; . Soure Municipal Council - Provision of municipal solid waste collection services to final destination, supply, placement, maintenance, washing and disinfection of containers; collecting “OAU”, bulky waste, carrying out environmental awareness-raising campaigns; . Reisswolf, SA - Waste Collection Service . Mafra Municipal Council - "Dou Valor" awareness-raising campaign; . Caldas da Rainha Municipal Council - Provision of solid waste collection services; . Monchique Municipal Council - Acquisition of services for the execution of two MSW container washing operations.
[Initials]
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With regard to the continuity of contractual relations through the renewal of contracts, it is important to highlight the following: . Mina de Água Civil Parish - Acquisition of public sanitation services in the Civil Parish of Mina de Água; . Celorico de Basto Municipal Council – Collection and transportation of municipal solid waste to final destination, washing, replacement and maintenance of containers in the municipality of Celorico de Basto; . Figueira da Foz Municipal Council – Hiring of maintenance and cleaning services for the beaches in the Municipality of Figueira da Foz; . Association of Local Authorities of Vale do Sousa - Acquisition of collection and transport services to MSW landfill, urban cleaning and others, in the Municipalities of Felgueiras, Lousada and Paços de Ferreira; . Valpaços Municipal Council – Acquisition of municipal solid waste collection services in the Municipality of Valpaços; . Almada Municipal Council - Acquisition of washing services for collective surface, underground and semi- buried waste containers in the municipality of Almada; . Ílhavo Municipal Council - Provision of urban cleaning services and management of the eco-centre in the municipality of Ílhavo; . Silves Municipal Council - Provision of services for washing of surface and semi-buried waste containers; . Ílhavo Municipal Council - Provision of services for the cleaning of the sands of the Barra and Costa Nova beaches, cleaning of areas of the Ria and cleaning of roads and leisure areas; . Terras do Bouro Municipal Council - Provision of services for the collection and transport of MSW to its final destination and sanitation of collection points, in the municipality of Terras de Bouro;
At the national level, several public tenders are expected to be launched during 2020 by the following municipalities and entities: municipalities of Melgaço, Viana do Castelo, Penedono, Ponta Delgada, Sintra, Viana do Castelo, Espinho, Estremoz, Lagos, Porto, Castelo Branco, Figueira da Foz, Loulé, Palmela, Setúbal, Tabuaço, Alter do Chão, Mesão Frio, Peso da Régua, Santa Marta de Penaguião, Oeiras, Póvoa do Varzim, Santa Maria da Feira, Coimbra, Maia, Valongo, Almeida, Santa Cruz, Alvaiázere, Estarreja, Águeda, Murtosa, Sever do Vouga, Alijó, Murça, Sabrosa, Moimenta da Beira, Santarém, Silves, Montemor-o-Velho, Penamacor, Ribeira Grande, Alenquer, Benavente, Tábua, Carregal do Sal, Castro Daire, Mangualde, Mortágua, Nelas, Penalva do Castelo, Santa Comba Dão, São Pedro Sul, Sátão, Tondela, Vila Nova de Paiva, Viseu, Vouzela, Tarouca, Covilhã, Marinha Grande, Ourém, Seixal and Vila Real, and civil parish councils in Loures, Espinho, Silvalde, and Anta e Guetim.
The relationship with the customer is fundamental and SUMA’s commercial area, in conjunction with the various persons in charge of the operation, as well as the Company’s own management, promote permanent contacts with current customers, as well as with potential customers, presenting best practice and adapting services to each one’s needs, while pursuing objectives related to market share and maintaining leadership in the domestic market.
Treatment of municipal solid waste The treatment of municipal solid waste performed by the SUMA group, with the integration of EGF and the 11 concessionaires of several other multi-municipal systems for the treatment and recovery of municipal solid waste, covers approximately 6.5 million inhabitants, 61% of the Portuguese population, distributed across 180 municipalities, and allowed to maintain the leadership in this market, during 2019.
[Initials]
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Following the international public tender for the sale of EGF, concluded in the second half of 2015 with the transfer of shares corresponding to 95% of the capital, SUMA TRATAMENTO bought 4.9884% of the shares in August 2017, with EGF Group employees purchased 0.0116% of the remaining 5%, which were still held by AdP SGPS. At that point, SUMA TRATAMENTO ended up with a 99.9884% stake in EGF.
The EGF group includes, in addition to the EGF itself, the following companies: VALORMINHO, RESULIMA, RESINORTE, SULDOURO, RESIESTRELA, ERSUC, VALORLIS, VALNOR, VALORSUL, AMARSUL AND ALGAR. EGF holds a majority interest in all 11 companies, concessionaires of multi-municipal systems (“SMM”) operating across an area of 48,089 km2, 52% of national territory. The population served represents 60% of the country’s inhabitants, or around 6.2 million people in 174 municipalities, and the EGF SMM treated and recovered around 3.3 million tons of waste in the year 2019.
Empresa Geral de Fomento, SA (“EGF”) EGF is a holding company responsible for managing and coordinating concessionaires of the SMM and its shareholder structure is almost entirely dominated by SUMA TRATAMENTO, which holds 99.9884% of the share capital, with 1,300 shares being held by employees of the Group.
The year 2019 was marked by some sectoral changes, namely the publication of PERSU 2020+ with the review of strategic measures that will allow to contribute to the fulfilment of the commitments taken on in PERSU 2020.
In terms of activity, the Investment Plan of around 90 million euros stands out, which will increase the capacity and efficiency of companies in order to achieve the targets of PERSU 2020 and PERSU 2020+. Following the approval by the regulator of abnormally low tariffs, the year of 2019 was demonstrative of the difficulties in maintaining the balance between the public service objectives, provided with the quality that is the prerogative of this Group, with the economic and financial sustainability of the companies. EGF promoted the interaction with the affiliates in the responses to the application processes underway at POSEUR, both aimed at new investments such as environmental awareness-raising initiatives, as well as in the coordination of interactions with the Portuguese Environment Agency (“APA”) and other interlocutors, in announcements regarding SIGRE licensing, the establishment of the value of consideration and the technical specifications of recyclables. Highlight for the continuity in the activity of the EGF holding, in the preparation and coordination of the Group, in terms of information and management tools, namely the preparation in terms of standardisation of procedures and integration into the SAP HANA system from 01/01/2019, of 8 group companies and EGF itself, as well as preparing all the integration process for any outstanding companies, as of 01/01/2020. A manual of analytical procedures was also implemented, for sustainability of the comparability of information and integration of the regulatory area in the monthly report (IIN - Integrated Business Information), which seeks to respond in an integrated manner to shareholders, regulator and APA.
ALGAR ALGAR - Valorização e Tratamento de Resíduos Sólidos, SA (“ALGAR”) was established in 1995 and promotes the appropriate treatment and recovery of waste produced in the 16 municipalities of the Algarve, contributing towards the well-being of the resident populations and the quality of the region’s tourism amenities. The shareholder structure of ALGAR includes EGF, which holds the majority of the share capital, with 56%, with the 16 municipalities of the Algarve holding the remaining 44%. [Initials]
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It provides services to the municipalities of Albufeira, Alcoutim, Aljezur, Castro Marim, Faro, Lagoa, Lagos, Loulé, Monchique, Olhão, Portimão, São Brás de Alportel, Silves, Tavira, Vila do Bispo and Vila Real de Sto. António.
In 2019, it treated 410,000 tons of solid waste and produced 19,948 MWh of electricity, based on a structure of thirteen eco-centres, a mechanical treatment unit, a mechanical and biological treatment plant, two sanitary landfills, two sorting plants, three green composting plants, two biogas recovery facilities, eight transfer stations and two reverse osmosis systems. We highlight the reinforcement of selective collection, with the acquisition of vehicles and ecopoints, the completion of the construction of the D cell of the Barlavento landfill, the installation of two LWTPs to treat the effluents produced in the new cells, the coverage of the new lagoon and pumping station of this landfill. Also noteworthy are the improvements in fire detection and firefighting systems at transfer stations, sorting units and landfill platforms. During this year, landfill exploration equipment, biogas, leachate treatment, multi-material sorting, organic recovery and fleet of transfer stations and selective collection were replaced. In 2019, construction began on the urban waste treatment and sorting centre at the Barlavento landfill.
AMARSUL The company AMARSUL - Valorização e Tratamento de Resíduos Sólidos, SA (“AMARSUL”) was established in 1997, and was awarded a contract to operate and manage the multi-municipal solid waste recovery and treatment system of the South Bank of the Tagus for a period of 25 years, a concession expanded in 2002 and in 2014, and which is now scheduled to end in 2034. It serves a population of 779,399 inhabitants in the municipalities of Alcochete, Almada, Barreiro, Moita, Montijo, Palmela, Seixal, Sesimbra and Setúbal and, for this purpose, operates nine eco-centres, a mechanical treatment plant, two sanitary landfills, an automated sorting plant, a composting plant, a mechanical biological treatment plant, two biogas recovery facilities and a transfer station. The share capital of AMARSUL is 51% owned by EGF, with the remaining 49% owned by the nine municipalities in the area. Its infrastructures are located in the three eco-parks in Palmela, Seixal and Setúbal, in addition to the components belonging to the selective collection system (eco-points and eco-centres).
In 2019, AMARSUL treated 447 thousand tons of solid waste, increased the amounts of recyclable materials collected and produced 20,829 MWh of electricity. The year was essentially marked by the realisation of the approved investment plan that will increase the company's capacity and efficiency in order to achieve PERSU 2020 and PERSO 2020+’s targets, the completion of the selective collection application approved by POSEUR in 2017, with an investment made in the amount of 6,566 thousand euros, 85% reimbursed.
ERSUC ERSUC - Resíduos Sólidos do Centro, SA (“ERSUC”) was established in 1996 and is the company responsible for treating and recovering the solid waste produced in 36 municipalities of the Central Coastal region, enhancing quality of life and the environment. The geographical area covered is around 6,700 km2, serving a population of around 1 million inhabitants. It is 51.46% owned by EGF, 5.98% by SUMA, 0.18% by the Biomass Energy Centre, with the remaining 42.38% being owned by 32 of the 36 municipalities served. Its infrastructure consists of two biological mechanical treatment plants, seven eco-centres, two sanitary landfills, two sorting centres, three biogas recovery facilities, seven transfer stations and two RDF production plants.
[Initials]
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In 2019, 419 tons of waste was received, representing a 1.6% increase compared to 2018. Energy production stood at 35,548 MWh, representing a drop of 10.3%. 2019 was a demanding year in the company's management, essentially due to the application of abnormally low tariffs, the entry into operation of a set of investments and the expansion of the selective collection activity. It should also be noted that the certification of the Integrated Quality, Environment and Health and Safety System is maintained under, respectively, the ISO 9001:2015, ISO 14001:2015 and OHSAS 18001:2007 standards.
RESIESTRELA RESIESTRELA - Valorização e Tratamento de Resíduos Sólidos, SA (“RESIESTRELA”) was established in 2008 and is responsible for the management and operation of the Cova da Beira multi-municipal sorting, selective collection, recovery and municipal waste treatment system. It provides services to the municipalities of Almeida, Belmonte, Celorico da Beira, Covilhã, Figueira de Castelo Rodrigo, Fornos de Algodres, Fundão, Guarda, Manteigas, Meda, Penamacor, Pinhel, Sabugal and Trancoso. EGF holds a 62.95% stake in RESIESTRELA, with the remaining 37.05% belonging to the 14 municipalities identified above. It boasts fourteen eco-centres, a landfill, a biogas recovery unit, a sorting centre, a composting plant and nine transfer stations, serving a population of 186,836 inhabitants within a geographical area of 6,132 km2.
During 2019, RESIESTRELA received and treated 76 tons of municipal solid waste and produced around 5.0 GWh of energy through energy recovery from biogas. It is important to highlight, in 2019, the consolidation of the operational transformation process that had been started in 2018, allowing to prepare the company for the future challenges of the urban waste sector. Considering the substantial changes verified in the national and community framework, implemented in the PERSU 2020+ version, it is considered that the new targets will undoubtedly be more ambitious and will force a new perspective for the sector.
RESINORTE Since 2015, RESINORTE - Valorização e Tratamento de Resíduos Sólidos, SA (“RESINORTE”) has been responsible for the concession of the multi-municipal urban waste sorting, collection, recovery and treatment system of the Central North region. Incorporated in 2009, it is 75.11% held by EGF, and the remainder by the Association of Local Authorities of the North Douro Valley and by 22 of the 35 municipalities that use the system. It covers a geographical area of 8,090 km2, serving a population of approximately one million inhabitants.
In 2019, 384 tons of waste were received, representing a 3.1% increase compared to 2018. Three-stream selective collection showed significant growth of 17.2% (40,568 tons). 2019 was marked by the strong investment made, exceeding 7 million euros, but still far below the plan approved by the regulator. In the operational plan, the strong increase in selective collection and the major improvements in the exploitation of landfills stand out.
RESULIMA RESULIMA - Valorização e Tratamento de Resíduos Sólidos, SA (“RESULIMA”) ensures the treatment and recovery of waste in six municipalities in Vale do Lima and Baixo Cávado. Covering the municipalities of Arcos de Valdevez, Barcelos, Esposende, Ponte da Barca, Ponte de Lima and Viana do Castelo, this system includes two eco-centres, a landfill, a sorting centre, a transfer station and a biogas electricity generation plant, covering a total area of 1,743.3 km2 and serving approximately 311 thousand inhabitants.
[Initials]
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It was created in 1996 and includes within its shareholder structure, together with EGF, the municipalities served.
In the year 2019, the activity was marked by the forwarding of around 14,506 tons of waste for recovery and recycling, the technical in-ground encapsulation of 141,000 tons of waste, the sale of 12 GWh of electricity to the national grid (due to energy recovery from the biogas collected in the landfill) and increased selective collection for the recovery of waste cooking oils. In 2019, the company's good performance in the audit of the renovation of the Integrated Quality, Environment and Health and Safety System was maintained under, respectively, in the ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018, highlighting the migration to this last standard.
SULDOURO In 1996, the company SULDOURO - Valorização e Tratamento de Residuos Sólidos, SA ("SULDOURO") was established, with EGF holding a 60% stake, the municipality of Vila Nova de Gaia owning 25% and the municipality of Santa Maria da Feira, 15%. It is an environmental services company that guarantees the appropriate treatment and recovery of waste in two important municipalities of the South Douro region. Its area of intervention is 384 km2, serving around 438 thousand inhabitants.
In 2019, it received around 215 tons of waste, an increase of 1.1% over 2018. In terms of energy recovery, landfill biogas and CVO, there was an export of 24,642 MWh of electricity. 2019 was a very demanding year in the management of the company, essentially due to the constraints in terms of revenue, which essentially originated from the decrease in the production and sale of energy and the effort in executing the investment plan.
VALNOR The core mission of VALNOR - Valorização e Tratamento de Resíduos Sólidos, SA (“VALNOR”), a company established in 2001, and responsible for the collection, sorting, recovery and treatment of solid waste in the 25 Municipalities under its catchment area (north Alentejo and Beira Interior), is the preservation of the environment in which it operates and the improvement of the services provided to the population within the context of municipal solid waste management. It operates in the municipalities of Abrantes, Alter do Chão, Arronches, Avis, Campo Maior, Castelo Branco, Castelo de Vide, Crato, Elvas, Fronteira, Gavião, Idanha-a-Nova, Mação, Marvão, Monforte, Nisa, Oleiros, Ponte de Sôr, Portalegre, Proença-a-Nova, Sardoal, Sertã, Sousel, Vila de Rei and Vila Velha de Ródão. The municipalities in question hold 46.67% of the capital, with the remaining 53.33% owned by EGF. The territory covered by the system has an approximate area of 11,980km2 and an estimated resident population of around 249,762 inhabitants.
In 2019, VALNOR treated 122 tons of waste and energy production from landfill biogas stood at 1.69 GWh. The year was marked by the consolidation of the operational transformation process, which had started in 2018, allowing the company to be prepared for the future challenges of the municipal waste sector, considering the substantial changes verified in the national and community framework, as reflected in the PERSU 2020+ version.
VALORLIS VALORIS - Valorização e Tratamento de Resíduos Sólidos, SA (“VALORLIS”) was created on 6 August 1996, is 51% owned by EGF and 49% by the Municipalities of Batalha, Leiria, Marinha Grande, Ourém, Pombal and Porto de Mós, covering an area of 2,160 km2 and serving a population of 301 thousand inhabitants. [Initials]
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The operation and management of the multi-municipal system of Alta Estremadura was awarded to VALORLIS in 1996, under an exclusive concession, for a period of 25 years, which was extended in 2014 to the year 2034. Its infrastructures are composed of four ecocentres, a landfill, a sorting plant, a mechanical biological treatment plant with an electricity generation plant and three transfer stations.
During 2019, VALORLIS ensured the management of approximately 174,000 tons of municipal waste and injected approximately 9,030 MWh of electricity into the public electricity system, resulting from the use of biogas as renewable energy. 2019 was marked by the operationalisation of all investments acquired in 2018, within the scope of the selective collection application approved by POSEUR, with the completion of the placement of container and collection means on the ground, which includes the provision of ecopoints and the implementation of selective collection proximity project.
VALORMINHO Valorminho - Valorização e Tratamento de Resíduos Sólidos, SA (“VALORMINHO”), established in 1996, is the concessionaire of the multi-municipal system for the sorting, selective collection, recovery and treatment of municipal solid waste from the Vale do Minho, which covers the municipalities of Caminha, Melgaço, Monção, Paredes de Coura, Valença and Vila Nova de Cerveira, forming part of the shareholder structure with a 49% stake, together with the EGF, which holds 51%. The system covers a total area of 950 km2, serving around 73,000 inhabitants and includes in its infrastructure two ecocentres, a landfill, a sorting plant, a transfer station, a mechanical treatment plant and a biogas energy recovery plant.
In 2019, VALORMINHO received and treated 40 thousand tons of waste, 3.5% more than the previous year. In terms of energy recovery of biogas, there was an export of 3,292 MWh of electricity, a value in line with that achieved in 2018. Mention should be made of the completion, in the course of 2019, of the construction of the unit for preparing urban waste for composting (“PRUC”), an essential infrastructure to enable the company to achieve the targets and objectives established in PERSU 2020+.
VALORSUL Valorsul - Valorização e Tratamento de Resíduos Sólidos das Regiões de Lisboa e do Oeste, SA (“VALORSUL”) was established in 2010 and results from the merger of the companies Valorsul, SA and Resioeste, SA. It is 52.93% owned by EGF and serves the municipalities of Alcobaça, Alenquer, Amadora, Arruda dos Vinhos, Azambuja, Bombarral, Cadaval, Caldas da Rainha, Vila Franca de Xira, Lisbon, Loures, Lourinhã, Nazaré, Óbidos, Odivelas, Peniche, Rio Maior, Sobral de Monte Agraço and Torres Vedras. It has two sorting centres, eight eco-centres, an energy recovery plant, a slag treatment and recovery facility, an organic treatment and recovery station, two sanitary landfills, five transfer stations and use of 50% of the VALORLIS organic treatment plant.
It treats and recovers municipal waste from 19 municipalities in the Lisbon and Western regions, having received 916,000 tons of municipal waste in 2019 and produced 8,976 MWh of electricity. The investment made during 2019 amounted to 15 million euros, with emphasis on the increase in the capacity of the packaging line at the Lumiar sorting centre, the optimisation of the plan line at this sorting centre, the expansion of the Óbidos transfer, the expansion of the Alenquer transfer station, among others.
[Initials]
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SUMA, in the area of municipal solid waste treatment, in addition to the EGF group, carries out the activity of managing contracts for the operation of landfills for urban solid waste and, in 2019, two contracts of this kind, managed by the following companies:
REAL VERDE – Técnicas de Ambiente, Lda (“REAL VERDE”) REAL VERDE was created in 2000 to manage the contract for the operation and maintenance of the Vale Douro Norte Inter-Municipal Landfill, an activity that continues until the present day. The area covered by this landfill, located on the north bank of the Douro River, includes the municipalities of Alijó, Mesão Frio, Murça, Peso da Régua, Sabrosa, Santa Marta de Penaguião and Vila Real. This contract was entered into in 2000 with the Association of Local Authorities of Vale do Douro Norte (AMVDN) and, in 2012, the parties reached an agreement to assign the rights and obligations of the customer AMVDN to RESINORTE – Valorização e tratamento de resíduos sólidos, SA (“RESINORTE”), a company that manages the North Central multi-municipal solid waste sorting, collection, recovery and treatment system. With an initial duration of 10 years, the contract was renewed in 2010 and again in 2015, for periods of 5 years, until 31 July 2020. At the end of 2016, two contracts with RESINORTE were concluded for the provision of door-to-door (“PaP”) selective collection services in Vila Real, which ended in December 2018, and for the operation of the landfill Leachate Wastewater Treatment Plant, which ended in 2019. In addition to the mentioned activity, the company developed the area of industrial waste collection in the region, continuing the work developed in 2018, increasing the collection and transportation services to the final destination for industrial waste and construction and demolition waste.
In this financial year, there was a significant increase in waste deposited in landfills, with 92,132 tons of waste dumped. This increase was due to the dumping of 46,138 tons by RESINORTE, consisting of rejects from Riba d’Ave. The disposal of this waste began in March 2018.
SIGA – Sistema Integrado de Gestão Ambiental, SA (“SIGA”) Created in 2008 to operate in the waste sector in the Autonomous Region of the Azores (ARA), this company results from a partnership between the two shareholders – SUMA and the Marques group. SIGA operates in the waste management market in the Azores archipelago as an operator geared towards promoting increased regional self- sufficiency and meeting the environmental development requirements of the region. In October 2018, as part of the public tender launched by MUSAMI, in June 2018, the consortium formed by SIGA and SUMA was awarded the contract for the “Operation of São Miguel Island Ecopark I and II”. This new contract will have a duration of 36 months, renewable for periods of 6 months to a maximum of 24 months.
The company’s performance during 2019 was positive. The objectives set were achieved, the contractual obligations were fulfilled, promoting continuous improvement in the services provided and customer satisfaction. During the year 2019, SIGA received 90,454 tons of waste.
The main activity of these companies is the management of contracts for the operation of landfills, but both include in their corporate purposes various activities, which allow them to provide services of overall waste management and enable diversification of its current core activity.
[Initials]
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SUMA holds minority interests in domestic companies operating in the MSW treatment market, which affords greater diversification and complementarity to activities within the group:
AMBILITAL – Investimentos Ambientais no Alentejo, EIM (“AMBILITAL”) Established in 2001 to manage the integrated system for the collection, treatment and recovery of municipal solid waste in the territorial area of the associated municipalities of the AMAGRA - Association of Alentejo Municipalities for Regional Environmental Management. SUMA holds 49% of the capital of this company, with the remaining 51% belonging to AMAGRA.
CITRUP – Centro Integrado de Resíduos, Lda (“CITRUP”) Founded in 2001, it is 30% owned by SUMA. The purpose of this company is to operate the Maia landfill, in support of the energy recovery plant called LIPOR II and other related activities.
ECOLEZÍRIA – Empresa Intermunicipal para o Tratamento de Resíduos Sólidos, EIM (“ECOLEZIRIA”) It was established in 2004, with SUMA holding a 24.5% interest and its main objective is the collection, treatment and recovery of municipal solid waste produced in the area of the municipalities associated with RESIURB - the Association of Local Authorities for the Treatment of Solid Waste.
Collection and treatment of industrial waste SUMA’s commitment to diversifying its range of services, namely in the market for the collection and treatment of industrial waste and other non-urban or urban-like waste, is evidenced by the investments made in this area, generating development and increasing penetration into this market.
The strategy of growing and developing this area has led to the formation of a group, led by ENVIROIL, which includes an array of companies specialised in this area of activity:
ENVIROIL, SGPS, Lda (“ENVIROIL”) ENVIROIL is a company that was created in 1997, and began operations with a project for the recycling of waste oils and the production of electricity. The company was incorporated into the SUMA group in 2009 and was restructured in 2012 and its corporate name changed to ENVIROIL, SGPS, Lda, with its corporate purpose being modified to the management of the holdings of other companies, as an indirect form of economic activity. After 15 years of activity and long-established know-how in the recovery of waste oils, the company transferred its industrial activity to a new company - ENVIROIL II - Reciclagem de Óleos Usados, Lda.
ENVIROIL II - Reciclagem de Óleos Usados, Lda (“ENVIROIL II”) ENVIROIL II was created in April 2011 with the objective of pursuing the activities of recycling of waste oils, electricity production and wholesaling of liquid, solid and gaseous fuels and derived products, activities transferred from the previous activity of ENVIROIL. ENVIROIL II has two units, in the Torres Novas unit, the Company develops activities for the regeneration of used, pre-treated oils, and the recycling of used, pre-treated oils. The second manufacturing plant, in Chamusca, came into operation in 2015, and was the first waste lubricating oil regeneration plant built in Portugal, with a capacity to regenerate 20,000 tons of waste lubricating oils, around 70% to 75% of the waste oils currently produced in Portugal. [Initials]
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In 2019, ENVIROIL II received 23,545 tonnes of waste lubricating oil, an increase of 3.01% over the previous year. For the regeneration activity, 20,765 tons were forwarded, an increase of 967 tons over 2018. For recycling, in 2019, 2,780 tons of waste oils were forwarded, down on 2018, in this case.
CORREIA & CORREIA – Gestão de Resíduos, Lda (“CORREIA & CORREIA”) CORREIA & CORREIA was incorporated in 1988 and began operations in the collection of waste oils. As of 2002, the Company has become a global industrial waste management operator, offering integrated solutions for collection, management and the provision of related services for a vast range of industrial waste, demonstrating a concern for the environment and safety in all activities pursued. Owned by ENVIROIL, it has been a member of the SUMA group since 2009. For the development of its activities, the company has three industrial units where it pursues its activities. The Sertã industrial unit boasts a hazardous and non-hazardous industrial waste storage facility, a waste oil storage and treatment facility, an industrial wastewater treatment plant, a sludge stabilisation/inertisation facility and a laboratory. The Vila do Conde plant stores, sorts and mechanically processes non-hazardous and hazardous waste and is certified for the storage, depollution and dismantling of end-of-life vehicles. The most recent plant, in Frielas, has capacity for the storage, sorting, treatment, recovery and disposal of waste and storage of category 1 animal by-products.
Despite the slight decrease in the number of tons of waste managed, which in 2019 reached 59,884 tons, CORREIA & CORREIA maintained its activity rates, due to the services provided and as a result of the good commercial performance of the Company, reflected in the increase of figures registered in 2019, in relation to 2018 The Company maintained the certification of its quality and environmental management system for the collection, storage and treatment of hazardous and non-hazardous waste, for later dispatch, either for their recovery or disposal. CORREIA & CORREIA implements an integrated management system based on the NP EN ISO 9001, NP EN ISO 14001, NP 4397 and OHSAS 18001 standards.
TRIU – Técnicas de Resíduos Industriais e Urbanos, SA (“TRIU”) TRIU has been present in the waste sector since 1991, dedicating itself to global waste management, mechanised sweeping and cleaning, technical cleaning and unblocking. Acquired by SUMA in 2008, it became part of ENVIROIL in 2012 when it was restructured. TRIU currently has facilities in the municipalities of Maia, Leria and Oliveira de Azeméis and an Integrated Waste Recovery Centre (“IWRC”) located in the municipality of Benavente, which has an area reserved for the management of Waste Electrical and Electronic Equipment (“WEEE”), being one of the reception centres under the European Recycling Platform (“ERP”) Portugal. In terms of global waste management, the company provides industrial, urban and similar waste collection and transportation services, provides leasing services for waste conditioning equipment, washes and sanitises containers and selectively collects waste. The company has the capacity to receive, sort and recover waste – paper/cardboard, plastics, wood, metals, glass, used tires, WEEE, construction and demolition waste (“CDW”) and other specific waste streams – and temporarily store non-hazardous and hazardous waste, as well as forward it for appropriate treatment. TRIU performs its activity in compliance with the requirements of the ISO 9001:2008 and ISO 14001:2004 standards with a view to achieving certification in this field.
During 2019, it managed 71,194 tons of waste, which represents an 8.85% drop compared to the previous year, as a result of the decrease in waste received for treatment.
[Initials]
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SRI – Gestão de Resíduos, Lda (“SRI”) This company was incorporated in 2008, within the companies ENVIROIL and CORREIA & CORREIA, to provide waste transportation services. In 2019, SRI acquired a 5% stake in the capital of ENVIROIL II - Reciclagem de Óleos Usados, Lda. (“Enviroil II”), a company belonging to the SUMA group.
The SUMA Group also has three companies that manage and operate non-hazardous waste (“NHW”) landfills:
RIMA – Resíduos Industriais e Meio Ambiente, SA (“RIMA”) RIMA is the managing body of the Lustosa non-hazardous industrial waste landfill and provides services in the industrial waste treatment sector, namely in-ground encapsulation of non-hazardous industrial waste. In 2009, it put into operation a landfill with a capacity for 771,429m3 of NHW and an expected life cycle of 16 years.
During the year 2019, there was a 50.84% increase in the amount of waste received at the RIMA landfill compared to the previous year. This substantial increase in activity, which resulted in the company’s increase in revenue, on the one hand was due to its acquisition of a larger market share – the number of RIMA customers grew by 5% in 2019 – and, on the other, to the pricing policy adopted since 2017, with more robust tariff setting. It should be noted that, as of September 2019, RIMA started receiving waste from Italy. Overall, changes in the amount of waste received were positively influenced by an 21.9% increase in non-hazardous waste and 54.1% in waste treated as urban waste, with a 0.5% fall in recoverable waste.
TRIAZA – Tratamento de Resíduos Industriais de Azambuja, SA TRIAZA was established in 2015, its objective being to build and operate a non-hazardous waste landfill in the municipality of Aveiro. Its construction involved an investment of 1.8 million euros, its estimated useful life cycle is 40 years and it has a disposal capacity of 171 thousand tons. It started operating during 2017 and, after a start-up phase, the company reached cruising speed in the second half of the year.
The year 2019 was characterised by the continued receipt of waste, at cruising speed, with attempts being made to consolidate the customer portfolio, necessary for the collection of waste for treatment within the company, and the commercial activities pursued, namely by means of the conclusion of trade agreements with waste management operators in the Greater Lisbon metropolitan area. It should be noted that, as of September 2019, RIMA started receiving waste from Italy and Malta, within the scope of Transboundary Movement of Waste processes, authorised by the Portuguese Environment Agency.
RESILEI – Tratamento de Resíduos Industriais, SA (“RESILEI”) RESILEI started its activities in 2003, with the construction, management and operation of the non-hazardous waste landfill in Leiria. In 2019, RESILEI managed 45,777.61 tons of waste, 28.54% up on the previous year. RESILEI’s integrated management system has been accredited since 2008 under the EN ISO 9001:2000, EN ISO 14001:2004 and OHSAS 18001:2007 standards for activities involving the intake, reception and confinement of non-hazardous industrial waste in landfills.
[Initials]
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These companies are licensed to receive non-hazardous waste at their facilities in accordance with the respective licences, and have diversified their scope of operation to include, in addition to landfill operations, sorting and temporary storage of non-hazardous waste, and some hazardous waste.
In addition to these three landfills, SUMA has formed a partnership to develop a project for the construction of a non- hazardous waste landfill in Aveiro:
CITRAVE – Centro Integrado de Tratamento de Resíduos de Aveiro, SA Established in 2009, its objective is to build and operate a non-hazardous waste landfill in the parish of Eirol, municipality of Aveiro. The company is currently developing this project, which has been adjusted since its initial formulation to render it sustainable and ensure it results in added value for the market in which it operates and for its shareholders.
International area SUMA continues its strategy of sustained growth and geographical deployment inside and outside Portugal through an ambitious internationalisation project and today boasts a presence in African South American and Asian markets.
The recognised quality of the services provided at home has been transferred to new latitudes, with the application of a range of competences and high quality standards, the objective being to ensure the successful completion of all its operations, and thus promote the group’s growth.
In order to optimise operational management and find the best solutions to guarantee high standards in the provision of services, SUMA has been creating companies locally, looking for solutions consisting of partnerships with local companies and taking advantage of synergies with our shareholders.
VISTA WASTE Management, Lda (“VISTA Waste”) VISTA WASTE was established under a consortium with the Mota-Engil group and, since late 2008, it has been operating with local partners in the Angolan market with a view to becoming an industry leader in the waste sector in Angola. SUMA has had a 49% stake since its incorporation, and ceased to be the partner with the highest percentage holding in 2014, when control was passed to the majority shareholder and the company ceased to be consolidated in its accounts under the full consolidation method. Nonetheless, production management is still under the control of SUMA, which uses the know-how of the group to continue to carry out waste collection and transport, urban cleaning, waste management and treatment and environmental education operations.
During 2019, VISTA Waste maintained its growth trend, complying with the integrated solid waste management concession contracts for the Provincial Government of Luanda, with a new contract for the collection of waste in the city centre of Cabinda and with the diversification for industrial collections, increasing activity and collected waste. The triple certification in Quality Management Systems (ISO 9001:2015), Environmental Management Systems (ISO 14001:2015) and Occupational Health and Safety Management Systems (ISO 45001:2018) has started, which is expected to be completed before the end of the first half of 2020.
[Initials]
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SIGAMB – Sistemas de Gestão Ambiental, Lda (“SIGAMB”) SIGAMB was created by the SUMA group in Angola to develop technical studies, consultancy and training in the environmental field. During the year 2019, it continued to provide services to VISTA Waste in support in the performance of its contracts.
AGIR - Ambiente e Gestão Integrada de Resíduos, Lda (“AGIR”) AGIR, created in Cape Verde in 2008, started operating in 2012, its first service contract being with the municipality of Praia, for the collection of MSW. The contract for the provision of door-to-door waste collection services in households and commercial establishments was annual, but the situation of uncertainty created in 2015 with the decision by Santiago da Praia Municipal Council not to renew the contract for another year, and alternatively opt for 30-day automatic renewals, lasted until the end of 2018. During 2019, it did not develop any activity and new business opportunities are awaited in this geography.
ECOLIFE, SA (“ECOLIFE”) ECOLIFE was set up in Mozambique to perform a contract for the provision of municipal solid waste collection services in the centre of Maputo, providing services to a population of 130,000 inhabitants. The company is minority-owned by SUMA, but its management model was applied with the objective of becoming a leading operator in the integrated waste management sector for the Mozambican market.
The quality proven over the six years of the journey, as well as the commercial investments that have been made, were the basis of the recent contracting of municipal solid waste collection services in the municipal district of KaMpfumu and respective markets, awarded by the Maputo municipal council to ECOLIFE, for a period of five years, which will add to the activity already held in the capital of this country. In its activity, during 2019, ECOLIFE increased the amount of waste collected, reaching 89,108 tons of MSW.
CONSITA, Ltda (“CONSITA”) In 2017, SUMA entered into a partnership with Empresa Construtora Brasil (Mota-Engil group) and, in a consortium, established ECB SUMA Participações, SA (“ECB SUMA”), which, in 2019, changed its name to GERES Participações SA (“GERES”), through which it acquired the company CONSITA, which has devoted around two and a half decades to waste management solutions and which was, in the early 1990s, a pioneer in the privatisation of urban cleaning services in Belo Horizonte, capital of the state of Minas Gerais, in Brazil. SUMA is a minority shareholder, but assumes a prominent role in the operational structure of the company, assuming responsibility for operation management.
In 2019, CONSITA provided urban collection and public sanitation services in the states of Minas Gerais, São Paulo and Brasília, providing services to around 5 million inhabitants. The exponential increase in activity comes from the reinforcement with new contracts, which together come to a total of 996 million reais, about 220 million euros. During 2019, CONSITA was present in Avaré, Belo Horizonte, Brasília, Conceição do Mato Dentro, Contagem, Itapevi, Itatiba, Santa Luzia, São Paulo, São Sebastião and Sarandi. To develop the contract with the city of São Paulo for the execution of services on the west side of the city, CONSITA constitutes ECOSS AMBIENTAL, a company with a specific purpose that has two local partners.
[Initials]
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SUMA - Serviços Urbanos e Meio Ambiente, Oman Branch (“SUMA Oman Branch”) SUMA has been in Oman since 2014, setting up a Branch Office, SUMA Oman Branch, as a vehicle for the activities to be pursued in the Sultanate, with the objective of participating in waste management tenders and starting operations in the country. In 2014, this focus on the Middle East resulted in the award of the decommissioning of six waste disposal sites in the province of Al Dakhiliyah, in northern Oman, to be performed within a time frame of six months.
During 2019, the activity served as a local link to the environmental education consultancy services promoted by SUMA. In order to expand SUMA's business in this geography, the Branch maintained the analysis of opportunities and the presentation of commercial proposals.
ECO VISION, LLC (“ECOVISION”) In order to develop activities in Oman, SUMA formed a consortium with Tanzifco and MCS, two companies with local operations, and in 2015 it was awarded a contract for waste management operations in South Al Sharqiyah. For the performance of this contract, the company ECOVISION was established under the laws of Oman, in which SUMA is the majority shareholder and is responsible for managing the contract. This project involves the collection of waste, the management of six transfer stations and management of a landfill. Services are provided to a population of approximately 336,000 inhabitants covering a total area of 20,108 km2. The company has implemented a quality, environment and safety management system, in accordance with the EN ISO 9001:2015, EN ISO 14001:2015 and OHSAS 18001:2007 standards.
During 2019, ECO VISION managed a total of 227,335 tons of waste, of which 211,238 tons were collected by the Company's operation.
SUMA also owns a company in Poland that has been operating for a number of years, EKOŚRODOWISKO Spółka zoo ("EKOŚRODOWISKO"), but which is not currently operating due to having encountered great difficulties in penetrating the market and consolidating its position.
A company was established in Macau – SUMA Macau, Lda (“SUMA Macau”) – and another in Hong Kong - SBE Waste Management, Lda – by SUMA, with the purpose of identifying and studying business opportunities in the Far East, assessing possible partnerships and local investors in the quest to launch SUMA’s operations in that part of the world.
SUMA maintains its targets of sustained growth of its international business and seeks to expand and globalise its operations with a view to creating value, reasserting itself as a quality-driven partner in all its operations.
Laboratory During 2019, the SUMALAB laboratory operated in its main areas of activity, namely in the analytical control of the quality of water for human consumption, the control of the quality of swimming pool waters, the control of the quality of bathing water, environmental monitoring of landfills, quality control of natural waters, analytical control of wastewater and profiling of municipal solid waste, namely the undifferentiated and selective portions thereof.
[Initials]
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The laboratory moved its facilities to Vila Nova de Gaia, in February 2018, and 2019 was a year in which it intended to stabilise the laboratory activity, in order to guarantee the quality of the service provided to customers.
The maintenance of accreditation of the SUMA laboratory under EN 17025:2005 for all existing parameters and samples is essential to its operations, and in 2019, despite the change of premises, this accreditation was maintained and the number and scope of accredited tests was extended, fulfilling one of the objectives set for this year and allowing 4 more tests to be made available in different water matrices and wastes, in order to meet the requirements of our customers. We also highlight the entry into force of a new Technical Accreditation Annex, in December 2019.
The laboratory's way of contracting services is fundamentally based on one-off or annual contracts, which implies a continuous improvement in all associated service provision. In order to expand accreditation to a greater number of parameters and to continue to significantly reduce customer response times, the laboratory started expanding its current facilities, which will allow for new analytical methods to be implemented, with the expectation of achieving, in 2020, accreditation for assays associated with these new analytical techniques, promoting a reduction in the number of subcontracted tests.
During 2019, 20,930 samples were taken, corresponding to the determination of 192,994 parameters, of which 102,760 parameters were determined internally and 90,234 were subcontracted.
Planning and Control The planning and control area of SUMA, which in terms of human resources has undergone several changes throughout the year, maintained a high rate of activity in 2019, with projects and works of a geographical component, budgetary component and operation control applied in several SUMA group companies.
In the geographical component, namely with regard to the geographic information system (“GIS” - Geographic Information System), an application developed at SUMA, the work carried out during 2019 was divided as follows: 32% supporting the studies and proposals department, preparing measurements and preparing work plans to attach to the proposals, all at the national level, and 68% supporting the operation, both nationally and internationally.
In support of studies and proposals, the work carried out for the contests in Valongo, Chaves, Póvoa de Varzim, Mogadouro and Condeixa, among several smaller ones, stands out for the duration of the work.
In support of the national operation, the most important works carried out, among others, are those carried out for the service centres in Torres Novas, Vila Nova de Gaia, Alcobaça and Sintra. In the specific case of Torres Novas, the work consisted of monitoring on the ground and monitoring the collection circuits, in order to carry out a study on the percentages of filling the containers to later optimise the circuits. This optimisation is expected to end and be implemented by the end of the first quarter of 2020.
Also in the scope of support for the operation, now at an international level, support was provided to the activity in Oman and Angola.
[Initials]
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We continue to develop and provide various applications with which we seek to optimise the work done by the operation, as well as obtain more reliable online information with the performance of the services on the ground. We highlight the application for our contract with AMARSUL, for the registration and control of the selective door-to-door collection activity, which includes online availability of all operation information for our customers.
In the budgetary and operational control component, the monthly monitoring of budget control and its implementation for all domestic service centres continued. As in previous years, all assistance was provided to the service centres in the preparation of the budget for 2020 and the closing forecast for 2019, and subsequent preparation of the various management reports.
Regarding the CIS – Contract Information Sheet, in 2019 the new version was launched, aimed at all cost centres, which now includes the monitoring of the operation, comparing the planning with that carried out, as well as the fulfilment of the economic, production, quality and safety and training objectives.
The production database (“BD Produção”) is an essential tool for monitoring the business, training and clarifications provided to the various users continued, affording us increasingly sound and reliable data. In mid-January 2019, a new version of BD Mobile was launched, improved and with more features, namely allowing the registration of diesel immediately after filling the vehicle.
For the year 2020, and reporting to human resources in the planning and control area, changes in its structure are foreseen, with the strengthening of the team affecting the geographic component, so that the Company is able to respond to the increase in requests and allow for the resolution of pending situations, mainly related to the operation. A new component is also foreseen, which will exist as of the beginning of 2020, and which is intended for the training of those in charge of the operation, with the objective of improving technical-administrative skills, in the area of planning and recording production activity.
Environmental education and awareness In 2019, more than 15,400 hours of training for environmental literacy were carried out in the national territory and more than 84,200 qualitative contacts were made face-to-face, according to a specific guide of procedures, of which about 14,500 were individual actions in the scope of door-to-door campaigns (which means that the average coverage of the population is lower than in previous years, based on sessions for large groups).
The needs of the market for the introduction of proximity systems and fire-by-fire collection of urban waste characterised the year under analysis, highlighting the completion of the awareness-raising process in 25,000 signalled fires from 7 municipalities in the Greater Porto region and the start and adjudication of a new awareness process, to 33,000 targets, also in the municipalities in the area of influence of LIPOR - in this case 8, joining Maia, Espinho, Gondomar, Matosinhos, Porto, Póvoa do Varzim, Valongo and Vila do Conde (in a 36-month contract). Also in São João da Madeira and Figueira da Foz, PAP campaigns were carried out, in specific areas, for 1,600 and 400 households respectively, with the introduction of collection systems for domestic recyclable and undifferentiated clusters.
[Initials]
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The results obtained in these dedicated campaigns attest to SUMA's capacity and the maturity of the awareness-raising team - meanwhile, reinforced with more elements - to operationalise these actions on the ground: more than 38,000 attempts at contact led to membership rates reaching 97% (average value of 90%) and 288% exceeding local targets (average value of 174%), having been responsible for a per capita growth indicator of triflux waste, between pre and post-campaign, registering the value of 136% (average value of 71%), which corresponds to a per capita/year reaching 53kg and, also, 82% ROI (return on investment - considering the €278,534.13 of Media Value obtained by the media exposure - resulting from the analysis of only one of the PAP campaigns).
The efficiency measures achieved reflect the mastery of the overall management of the awareness-raising process, since this team of almost two dozen specialist technicians is responsible not only for the implementation of awareness initiatives on the ground, but also for the design, monitoring and evaluation of results, distribution of containers and management of databases, and dissemination of campaigns in the media and social networks.
The internal goals established - such as the objective of increasing the provision of education and environmental awareness-raising services to non-contract customers - were also exceeded with a result of 72% (72.15%) increase in turnover in the year in question and an increase in the customer portfolio of more than 48% (48.15%). Figures resulting from the acquisition by 13 non-contract customers - the municipalities of Coruche, Ílhavo, Oeiras, Oliveira do Bairro, Mafra, Nazaré, Santiago do Cacém, Seia and Vila Nova de Poiares, the intermunicipalised waste management service of the large port LIPOR, the Carnide civil parish council, the national company FERPINTA and the omanita company be'ah (customer of ECOVISION - SUMA company for the local market) - of education and awareness-raising services for a total of 247 752 euros billed.
The extra services purchased were varied between the dynamization of mobile awareness-raising units and structures - ZOOURBANIDADE®, CIDADÓMETRO® and ECO SPOT® -, the development of major mobilisation initiatives - “Caninos em Protesto - Cãominhada”, “Faço Festão” and “Mascotes - Extraviados”- educational sessions in the school context and in commercial areas -“Lixo Culpado”, “Produções com Lixo”, “Da Loja ao Lixo” and “Sou Fresco” -, the mobilisation initiatives in the workplace and alongside the business fabric - “Combate aos Mitos”, “Resultados à Vista” and “Ponto Azul” -, the acquisition of supports and communication pieces - “Mar de Descuido” -, and technical advice - for the be'ah company. Worth mentioning is the latter type of initiative - a novelty in the service package provided by the department -, which began in September 2019 and will continue until March 2020 (with the possibility of extension up to one year). Requested by be'ah, this service provision comprises the definition of behavioural mobilisation strategies, the diagnosis of current and previous intervention programmes, planning, co-development and support for the implementation of programmes, the implementation of evaluation methods, the training of the technical team and local mobilisation agents, and technical visits to monitor the implementation of strategic plans in Portugal, with a view to training the company's technical staff to better respond to the sustainability challenges of this Arab country.
Within the scope of contracts and strategic intervention plans developed with the group of regular customers, there was a preference for campaigns on packaging and disposal (33.7%), followed by a reduction in the production of waste at the source (14.3%), the recovery of waste (9.1%), the reuse of materials and forwarding of un/helpful materials (5.2%) and cross-cutting campaigns (2.6%), with emphasis on the selection of large mobilisation initiatives in 15.6% of cases, mobile awareness-raising units corresponding to 9.1% of situations, eco-educational platforms (6.5%) and, finally, fixed awareness-raising structures (3.9%). [Initials]
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In all, 76 campaigns were carried out for 22 customers - Alcanena, Alcobaça, Batalha, Celorico de Basto, Coimbra, Condeixa-a-Nova, Figueira da Foz, Guarda, Ílhavo, Marinha Grande, Montemor-o-Velho, Ourém, Porto de Mós, Rio Maior, Santa Maria da Feira, São João da Madeira, Terras do Bouro, Valpaços, Vila Nova de Cerveira, Vila Nova de Gaia, and in municipalities in the area of influence of Amarsul and Valorsul -, with emphasis on the implementation of the initiative “O lixo não é culpado, culpado é quem o abandona” in 11 municipalities.
But the cycle under analysis is also characterised by the creation, in the second half of the year, of new indirect and networked awareness-raising formats, such as the “Faço Paragem” initiative and the eco-educational app “Em SUMA Valoriza” for new target audiences - public transport users and internet users. Taking advantage of the waiting time for public transport to review behaviours is the objective of the initiative “Na “batalha” do dia-a-dia faço uma paragem rumo à sustentabilidade” which included the placement of thematic panels on more than 10 bus stops in the Batalha municipality, with concrete data on individual savings obtained by adopting sustainable consumption routines and channelling resources. The app, designed to extend access to specific content on waste recovery and complement actions in the educational context, integrates several benefits such as a geolocation system of the local ecopoints network, the answer to frequently asked questions about recycling, various news about environmental sustainability, stories and videos about eco-education, online forums to interact with other users who are enthusiastic about these topics and also a “thematic image reader” for an interactive experience of augmented reality.
For the year 2020, a growth in the adjudication of non-contract education and environmental awareness-raising services is expected, namely to monitor the introduction of door-to-door collection systems and systems of proximity to bio-waste and recyclables, a consequence of market interest, the availability of POSEUR funds, the urgency to recover the organic and recoverable resources existing in waste, and the recognition of SUMA's know-how in this area.
Human resources SUMA invests in the management of human resources with the objective of encouraging workers to get involved with and commit to the corporate culture, focusing on the advancement and motivation of workers, training and safety, quality and improving working conditions, highlighting the crucial role that the workers play in the success of the Company.
In 2019, SUMA had an average workforce of 1,723 employees, plus seven workers assigned by municipal councils, the number of employees having changed with the development of the company's business, resulting in an extra 15 employees in relation to the previous year.
SUMA’s human resources management (“HRM”) department centralises the management of this area for various SUMA group companies, as a result of which the following report summarises the activities carried out in relation to this group of companies, namely: SUMA, SUMALAB, SUMA Esposende, REAL VERDE, RIMA, SIGA, TRIU, BELT & BELT, ENVIROIL SGPS, ENVIROIL II, and TRIAZA.
During 2019, this group of companies had an average of 2,089 workers, with a mean age of 44 years, of which 85% were male. In the group of workers of these companies in the group, 85% of the workers belong to the operational activity area, with the remaining 15% belonging to the administrative structure and workshops.
[Initials]
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Most are of Portuguese nationality and the majority have reached the 1st key stage of basic education (29.5%).
During the period under review, absenteeism among these companies stood at 6.4%, mostly due to sick leave. Annual turnover stood at 38% in 2019, as several new services began and also some service contracts came to an end.
In terms of disciplinary management, disciplinary proceedings were instituted in 14 cases during 2019, with 6 ending in dismissal with just cause.
In 2019, recruitment and selection (“R&S”) activities continued the trend witnessed in previous years. This year, as in 2018, given the difficulties of hiring heavy vehicle drivers and mechanics, profiles typically associated with production services, HRM services were requested for the recruitment of these professionals, in addition to the processes normally associated with support services, namely the identification of administrative and technical profiles. 104 recruitment processes were carried out, of which 84 refer to production profiles - waste operators, heavy equipment operators, and workers for workshops and warehouses. This increase in R&S activity led to the adjustment of candidate identification processes, with the company seeking to strengthen partnerships with public entities (Job Centres and Occupational Integration Bureaus), as well as with vocational schools and institutions whose students fit the established profiles. The recruitment processes for waste collectors for the summer music festival, “NOS Alive” and the “Capital do Natal” event, should also be mentioned, which saw 125 workers recruited for the former, and 69 workers for the latter one-off event.
In the field of occupational health, HRM has been carrying out a flu vaccination campaign directed at all Group employees. This campaign has been highly valued by the employees and is all the more relevant given the fact that many of our colleagues are exposed to the elements and are at a vulnerable age. In 2019, 904 employees were registered across 34 different locations. The implementation phase took place between November and January, in line with Department of Health recommendations.
Even in 2019, SUMA, always concerned with the well-being of its employees, continued providing curative medicine consultations at its headquarters, allowing all employees to access medical consultations and medical prescriptions, thus saving time and resources to them.
Equipment and procurement The SUMA fleet was renewed in 2019 with the entry into service of 55 new pieces of equipment, which will enable the company to meet its current contractual commitments more reliably and for a lower operating cost. In addition to these, 11 pieces of equipment powered by Compressed Natural Gas (“CNG”) were purchased and will be allocated during 2020 to contracts with the Municipalities of Figueira da Foz and Coimbra. The entry into service of this equipment came to rejuvenate the SUMA fleet and make it more able to cope with the increasing levels of operational and environmental demands of its customers.
In early 2019, the operational lease contract (“AOV”) with SMAS de Sintra started. The contract, having a duration of 8 years, consists of the operational rental without a driver of 18 vehicles, which were purchased according to the customer's specifications. The contract comprises side collection, selective collection and transport in special vehicles and has an overall value of around 10.7 million euros.
[Initials]
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A new tyre monitoring and control system was implemented under the new SMAS AOV contract, which will focus on the correct maintenance of pressures using a Continental® system. It allows the control and maintenance of correct tyre pressure levels in order to increase tyre life and consequently reduce costs. The tyre tracking service was awarded to the company Recauchutagem São Mamede. Monitoring includes the rotation, replacement, checking and repair of tyres. A similar tyre monitoring test is also being carried out in the central region (Ourém, Alcobaça, Batalha and Leiria).
The COF – Controlo e Otimização de Frotas, is a system developed by SUMA that receives data from three sources: a GPS installed in the vehicles, the internal Production Database (“DB Production”) application and Planning data (PLC). Its main features are the graphical and analytical verification of the routes taken and respective quantification of deviations from that which is planned, also allowing the monitoring in the equipment of various events such as speeding, abrupt accelerations and decelerations and excessive rotation. Thus providing better control, analysis and optimisation of the various services performed. The implementation of the COF at SUMA started in the last quarter of 2012 at the Vila Nova de Gaia and Santa Maria da Feira service centre and was extended in late 2013 to the Vale do Sousa service centre. In 2018, the following service centres were implemented: Aveiro, Ílhavo, Batalha, Porto de Mós, Ourém, Alcobaça, Algar, Alcanena and Palmela. In 2019, the system was implemented in Guarda, Leiria, Torres Novas and some smaller service centres, such as Castelo Branco and Belmonte. There are currently around 420 GPS units fitted throughout the fleet, around 95% of vehicles, and fully operational in the main centres, of which 68% belong to the heavy duty category, 30% to the lightweight category and 2% to the special vehicle category. For 2020, the extension to the other SUMA centres is expected, with special emphasis on the centres of Coimbra and Algarve. In 2019, the change in the COF was also made to adapt to the new Mix API.
The predictive maintenance system – Stratio – which started testing in 2018, is a predictive maintenance system, from Stratio, allows the monitoring of the various vehicle systems, by reading their sensors, obtaining their measurements, analysing any existing errors, and through artificial intelligence models, obtaining alerts of potential malfunctions or problems that may occur. The goal is for the company to obtain valid information in order to be able to anticipate or minimise faults, thereby achieving a significant reduction in corrective maintenance, with its inherent costs and downtime. In 2019, the system was extended to 25 vehicles that are operating in the centre and south of the country. The system transmits the status of various components, problem alerts or potential vehicle problems on a daily basis. In particular, it provides information on alerts created through specific logarithms, data from the vehicles' DTCs (Diagnostic Trouble Codes), information on the status of brake pads, available engine torque, battery status, graphs of the various instruments, consumption, analysis of potential failures of some components, among others. The system has been evolving significantly and being adjusted to our needs and specificities.
In September 2019, in the São João da Madeira contract, the implementation of a door-to-door collection system started, with operational management supported by the Moba system. In addition to the robust management software, 4 vehicle antennas for reading the containers (RFID) were installed, respective cabin consoles with an integrated GPS system and all the containers were equipped with the respective tags. A set of 4 containers were delivered (120 litres: 1 undifferentiated + 3 selective) to each citizen who wished to participate in the project and with the registration of all this data to be carried out with a portable device. The entire collection system will be managed with this software, with the main emphasis on monitoring collected containers and dynamic optimisation of routes.
[Initials]
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In 2019, the training system was followed up with close monitoring of the drivers/operators, with good practices in the operation with the various heavy equipment being transmitted, both the operation with the chassis and the operation with the superstructures, with special focus on safety and conservation of the equipment. The training system has a driver assessment based on defined points, with a view to periodic monitoring. The method has been very well received by operators and has resulted in added value for the company.
In 2019, the internal equipment debits model came into force, reformulated at the end of 2018. This new debit model ensured greater predictability of the equipment costs borne by each contract, allowing the operation to focus on the costs directly controlled by it and Maintenance Management to adapt its maintenance plans to the intended use of the equipment.
The computerisation of warehouse readings is being prepared using barcodes, in order to facilitate the issue of materials, was not implemented. The various market players presented very high values for the implementation of the system. The biggest problems come from the connection to the ERP SAP/R3 system and the fact that, over the next year, we will migrate to a new version, SAP HANA. We remain convinced that the advantages of this system are many, from enabling the faster delivery of materials to improved stock control and more streamlined product registration. The eradication of errors is very important, given that no two barcodes are the same, thereby increasing the accuracy and security of logistics processes. As a main objective, it is hoped that the improved efficiency of the processes will be reflected in significant cost reductions. We decided to develop a mobile application internally and using Microsoft Powerapps, which will allow us to create Excel files with the movements, to later upload to the SAP ERP. The application of the Equipment Management and Maintenance area is currently in the debug phase and will be implemented for testing at the Ourém service centre.
The modernisation of the SUMA fleet and the development and implementation of customised solutions, according to customer needs (RFID system, Natural Gas fleet, SMAS Sintra operational lease) marked 2019. In terms of innovation in work processes, we highlight the almost full adoption of the COF system, the pilot with the Stratio predictive maintenance system and the barcode reading system in the warehouses. These developments have the common objective of increasing the efficiency of equipment and processes, supporting SUMA's competitive position in the market.
Training The year of 2019 proved to be the year of consolidation of the changes made both in terms of training and in terms of the restructuring that the department underwent in the previous year. A more direct training initiative was defined in the workplace, to the detriment of classroom training, also using training in partnership with tutors. Even so, the changes made in 2018 continue to have an impact on the training department's operational intervention capacity, which during 2019 made great efforts to be able to respond to what has been the company's performance at this level.
[Initials]
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In this context, objectives were defined not only in terms of direct action by the training department, but in the total training managed by it. Thus, for 2019, 3,526 training sessions were established, with the integration of 17,756 trainees, with an annual fulfilment of 70,117 hours.
In the training plan to be carried out by tutors, in 2019, unlike previous years, the number of training actions to be carried out was not set as an objective, but the number of training hours to be carried out by each worker in the areas of safety, equipment operation and conduct.
Thus the following objectives were defined: objective 1 – 10 hours of training per worker, in the areas of safety and equipment operation and conduct; objective 2 - to achieve 2,614 attendances at on-the-job training sessions, in the areas of safety and equipment operation and conduct; objective 3 - to achieve 13,070 hours of on-the-job training, in the areas of safety, equipment operation and conduct.
As stipulated from 2018, performance data are presented based on the 3 existing modalities: FOR INT – Classical Training, FLT – Training in the Workplace, and FPCT – Practical Training in the Workplace. In the table below, we present the data related to the planning and execution of training sessions in 2019, based on the three main performance indicators: number of sessions performed versus planned sessions; number of trainees achieved versus planned trainees; hours performed versus hours planned.
Training Training Number of Number of Trainees Trainees Action Code Sessions Sessions Hours Hours Planned Achieved Planned Performed Planned Performed FOR INT 24 27 79 123 2 - 120.0. 3 - 716.5. FLT 325 920 14,500 16,842 43,350.8 58,326.8 FPCT 3,177 3,418 17,756 20,685 70,116.8 105,753.7 Total 3,526 4,365 32,335 37,650 115,587.6 167,797.0
We proceeded to the evaluation of compliance with the objectives/goals and planned results, starting the analysis with compliance of the “tutors” project. For 2019, the indicator for the number of tutorials was changed, with tutors being asked to perform 10 hours of training per worker, including the completion of grids in the area of safety, equipment operation and conduct. It would be at their discretion to carry out one or the other theme or both simultaneously. The duration and number of training sessions would also be at their discretion, provided that 10 hours of training per worker were carried out, as previously mentioned. The remaining two indicators of number of hours and number of workers remained unchanged. We present below the results obtained in the 3 indicators related to the 2019 tutor programme.
13020 1302 10 10812
9,5 1133
N.ºNº of Horas hours N.ºNº ofHoras hours \formandosplanned \formandosperformed FormandosTrainees FormandosTrainees VolumeVolume Horas of VolumeVolume Horas of planeada realizada Planeadosplanned Realizadosachieved hoursPlaneado planned hoursRealizado performed
[Initials]
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Regarding the training managed by the training department, general objectives were defined that encompass the three Regarding the training managed by the training department, general objectives were defined that encompass the three types of training intervention existing in the company: FOR INT, FLT and FPCT. These objectives aimed at carrying types of training intervention existing in the company: FOR INT, FLT and FPCT. These objectives aimed at carrying out a total of 3,526 training sessions, integrating 17,756 trainees in training sessions and providing 2,120 hours of out a total of 3,526 training sessions, integrating 17,756 trainees in training sessions and providing 2,120 hours of training. Thus, the results obtained are presented, in view of the determined objectives. training. Thus, the results obtained are presented, in view of the determined objectives. FOR TotalInterna FOR Total INT FOR Interna 105753Total 105753 70116 105753 70116 17756 20685 17756 20685 3526 3418 3526 3418 Formandos Formandos Volume Horas Volume Horas AF Planeadas AF Realizadas FormandosPlaneadosTrainees FormandosRealizadosTrainees VolumeVolumePlaneado ofHoras hours VolumeRealizado ofHoras hours AFTS Planeadas planned AFTS Realizadas performed Planeadosplanned Realizadosachieved Planeadoplanned Realizadoperformed
In the evaluation of the impact of training activities on the organisation, we presented the data collected in the In the evaluation of the impact of training activities on the organisation, we presented the data collected in the processing of the results of the application of the “Training Evaluation Questionnaires”, for participants, and the processing of the results of the application of the “Training Evaluation Questionnaires”, for participants, and the achievement of the “Effectiveness Evaluation” objectives established for each training campaign, for internal training. achievement of the “Effectiveness Evaluation” objectives established for each training campaign, for internal training.
In an overall assessment of the effectiveness of Results achieved In an overall assessment of the effectiveness of Results5% achieved training, trainees expressed very positive 0% 5% training, trainees expressed very positive opinions regarding the impact of the sessions on 0% opinions regarding the impact of the sessions on 2% their learning outcomes. As can be seen in the 2% their learning outcomes. As can be seen in the graph, 93% of trainees regard the impact of graph, 93% of trainees regard the impact of training positively. Only 2% claim to have had 52% training positively. Only 2% claim to have had 41% 52% satisfactory results, with the remaining 5% not 41% satisfactory results, with the remaining 5% not answering the questions. It should be noted that answering the questions. It should be noted that there were no negative responses regarding the there were no negative responses regarding the impact of the training. Excelente Bom Suficiente Insuficiente Não Responde impact of the training. Excellent Good Sufficient Insufficient Didn’t answer Excelente Bom Suficiente Insuficiente Não Responde
As for the analysis resulting from the application of the observation grids, in 2019 they continued not to lack any type As for the analysis resulting from the application of the observation grids, in 2019 they continued not to lack any type of alteration, the result of the great degree of maturity that the project presents. Tutors continue to use this resource as of alteration, the result of the great degree of maturity that the project presents. Tutors continue to use this resource as a work tool, combining training with the daily practice of observing their work teams. The following graphs show the a work tool, combining training with the daily practice of observing their work teams. The following graphs show the results obtained in the application of the observation grids, which takes into account all the observations in the three results obtained in the application of the observation grids, which takes into account all the observations in the three items “Occupational Health and Safety” (“HST”), “Behavioural” (“KTL”) and “JUMP IN”, for collection and equipment items “Occupational Health and Safety” (“HST”), “Behavioural” (“KTL”) and “JUMP IN”, for collection and equipment services (“PD”), and for manual cleaning and related services (“LU”). services (“PD”), and for manual cleaning and related services (“LU”). PD Conduct LU Conduct PD Conduct 4000 LU Conduct 10000 8367 8626 4000 2982 100008000 8367 8626 3000 2598 2982 60008000 3000 2598 2000 40006000 OK 1583 2000 OK 20004000 624 735 284 1000 A Melhorar 1583 268 365 2000 624 735 284 1000 188 76 ATo Melhorar be Improved 0 268 365 0 Comportamental Higiene e JUMP-IN 0 188 76 ComportamentalBehavioural OccupationalSegurnaçaHigiene e no JUMP-IN Comportamental Higiene e JUMP-IN 0 Segurnaça no Trabalho ComportamentalBehavioural OccupationalHigiene e JUMP-IN SegurnaçaHealth and no Trabalho TrabalhoSafety SegurnaçaHealth and no Trabalho Safety
[Initials] [Initials]
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The results obtained demonstrate the excellent impact of this form of training, given the low indices of behaviours identified as “To be improved”, compared to “Ok”, highlighting the good working practices that are implemented in the operations.
As in previous years, the analysis of the accident rate is one of the main indicators in the construction of the training plan. In this way, the resulting data are considered in the preparation of the annual training plan, and channel the implementation of tutorials directed towards those services, tasks, workers and/or operations that have been identified as a priority in terms of risk. They will also be used to define, construct and implement one-off training campaigns and/or training sessions to be used as corrective and preventive models to guide employees’ daily work and, consequently, to reduce the occurrence of accidents within the Company.
Quality, environment and safety Quality and Certification In May 2019, a combined audit was carried out by APCER of the Quality Management System (NP EN ISO 9001:2015) and Environmental Management System (NP EN ISO 14001:2015) and monitoring of the Occupational Health and Safety Management System (OHSAS 18001:2007/ NP 4397:2008). APCER considered that the necessary conditions had been met for SUMA to maintain the certifications of the Integrated Quality, Environment and Occupational Health and Safety Management System, which is implemented for the design, development, planning and commercialisation of Urban Cleaning, Collection and Transport of Non-Hazardous Waste, Container Management, Eco-centre Management, Environmental Education and Awareness in the headquarters building and execution and operation of the activities mentioned at the Aveiro service centre.
To be highlighted in the audit, which the certifying entity considered as strengths and good practices: . Competence of the organisation within the scope of the SG and the services provided; . High level of knowledge of regulatory and legal requirements; . Content and form of management review and presentation; . Degree of compliance with procedures and objectives; . Investment in environmental education; . The good conditions of the headquarters building; . Setup and organisation of the Aveiro service centre; . 10-minute safety programme; . Setup and organisation of the ecocentre; . Tutors Programme; . Amount of training hours - 9,941h in 2017 and 6,740h in 2018; . Involvement of employees interviewed within the scope of the SG; . The overall effort on the part of the organisation to improve the SG.
Safety In terms of safety, the department reinforced internal visits and audits of services and facilities with the aim of identifying critical points and correcting them, and defining, together with the various operational actors, corrective and preventive measures in order to reduce accidents and to promote good working practices.
[Initials]
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In practical terms, there were positive results with regard to the accident rate, with a decrease in accidents compared to the last two years, despite the fact that the data on their severity has increased slightly, as can be seen in the following graphs. Even so, this last indicator, in terms of severity, should be put into perspective, due to the lost days of some accidents that increased the annual average in excess.
350 5032 6000 300 4353 4542 5000 4197 3928 250 3242 3323 3179 3301 4000 200 2796 3000 150 2000 100 50 1000 312 243 207 217 175 157 174 224 224 189 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
N.º ofAT work accidents N.º DIASof days lost PERDIDOS
700 645 635 20000 564 544 562 600 515 510 526 458 468 15000 500 17107 16468 400 13896 14449 13020 12898 13107 10000 300 11921 11126 10155 200 5000 100 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
IFFrequency - ÍNDICE FREQUÊNCIArate IGSeverity - ÍNDICE rate GRAVIDADE
In addition, it is worth mentioning the study carried out by the department in the identification of a new personal protective equipment (“PPE”), for waste collectors/waste operators operating in vehicles with stirrups. This study aimed at revising the hazard and risk assessment maps of the operations, and sought to strengthen the safety of our workers, always promoting more and better working conditions. After conducting this study, the implementation of a helmet was defined, with the standard EN1077, class B, to be added to all waste collectors with services in vehicles with stirrups.
This new PPE will be implemented in April 2020 and considered mandatory for the aforementioned function and service.
Environment Regarding the environment area, further interventions were carried out at the premises through technical visits and internal audits, which sought to identify critical situations and opportunities for improvement, which together with the various operational actors, were corrected, with various corrective and preventive measures being implemented. Given the high associated legal component, this work takes on a more inspiring outline and a longer assessment time.
[Initials]
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Also directly associated with the intervention of the TQSED department (Training, Quality, Safety and Environment Services), there are various other initiatives and works that result in the department achieving a sounder and more effective level of performance, namely: . The updating of internal documentation, as well as the standardisation and simplification of the various company processes, with regard to the Integrated Quality, Environment and Occupational Health and Safety System, both administratively and operationally, aiming at greater effectiveness and efficiency of services; . The drafting of commercial bids, mainly in the definition/drafting of environment and safety plans, and training plans, under the scope of the services rendered in tender procedures. The aim is to ensure that the services provided are based on customer requirements, comply with current legislation, are carried out safely for workers and third parties and respect the environment; . OHS consultation campaigns with workers; . Customer satisfaction assessment, with personalised questionnaires being sent to the various customers of the Company, in order to gauge their overall satisfaction with the services provided by SUMA. . Safety and environmental awareness-raising and information campaigns, targeting all employees in the organisation, specifically reducing water and energy consumption, directing operations towards better working practices to reduce and optimise resources, and preventing accidents, with the dissemination of various indicators throughout the organisation and the promotion of good health and safety practices. . Dynamization of the 10 MDS sessions, with the reinforcement of the themes to be taught, as well as the direct availability, to the Tutors, of data that reinforce the subjects covered.
Information systems In 2018, SUMA began the migration of the previous data and internet circuits operator, to the new operator, Vodafone, and continued the implementation of data accesses in new service centres during 2019. The offer of the operator Vodafone, of accesses based on 4G technology, has proven to be a significant added value in the case of small service centres, promoting speed of implementation, low cost and performance adequate to the requirements.
During the second half of the year, analysis was carried out on possible alternatives to the anti-malware / antivirus solution, in use in the SUMA group. This study was due to the fact that, at the beginning of 2020, the licensing triennium of the referred solution ended and the aim was to determine whether there were reasons to proceed with a change of product. The following variables were considered: cost, functionality, ease of implementation and reliability. It was concluded that there are not enough reasons to make a change in this area, so the existing license will be renewed.
In 2019, it was decided to replace the mobile communications contract provider MEO with Vodafone, with the new contract presenting more favourable conditions than the previous one. The replacement of cards and, when necessary, of mobile equipment, began in 2019 and will end, predictably, in the first quarter of 2020.
With regard to internal application developments, a new BD Produção instance was created, this time for a waste operator in the Ivory Coast (EcoBurnie), and new versions of BD Produção Mobile (SUMA Mobile) were launched, with some corrections and addition of features. The latest version has been in operation for several months and has proved to be quite stable. In addition, maintenance work continued on existing applications, namely, BD Produção Portugal, Angola, Oman and Mozambique, User Portal, Loss Ratio, Training, Inventory, Holidays, COF, Personal monthly registration, SUMA DER, among others. [Initials]
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At the end of 2019, it was decided that the current network infrastructure (networking) needs to be improved, with the main objectives of increasing its performance and security. Once the studies of the solutions to be implemented have started, it is estimated that they will be concluded in the first quarter of 2020, and it is equally predictable to be able to apply their conclusions from that time until the middle of that year.
Institutional image and communication In addition to its annual and continuity projects, the celebration of SUMA's fourth century of existence has impacted the activity developed by the Institutional Image and Communication area. The dissemination of this event in the organisation's internal and external media, including its social networks, was accompanied by the development of a specific logo, affixed to electronic signatures and reproduced stationary elements, as well as a commemorative video, with the presentation of the faces of workers, ex-management and teams from the different geographies where SUMA services are implemented, literally representing those who represent the organisation every day.
The celebration of a quarter of a century of an ambitious path and remarkable challenges overcame materialised on 11 October, with SUMA gathering around two hundred guests at the Monastery of Batalha, in an event characterised by a programme dedicated to strengthening ties and corporate values, for which all support elements were outlined and developed, namely, extendable panels, speeches, offers and decoration. This commemorative year was reinforced by the attribution of two awards for business excellence, which deserve internal and external dissemination, for which a press release was created and sent to the media, generating several related news, as well as publications for SUMA social networks. Internationally, the organisation was recognised as “Best Waste Management & Collection Company – Portugal” by the Business Excellence Awards, evaluated by an independent panel of judges, which includes specialists in the area and winners of previous editions of the event. At the national level, SUMA was approved, for the third consecutive year, as a “Trusted Brand – Environment”, in the category of “Waste Treatment Companies”, which, as an award voted directly by a significant sample of the Portuguese population, reveals the relationship between the quality standards of operations and the trust established in the partnerships that SUMA is part of. Both logos were integrated into the SUMA communication elements, which already contained the Trusted Brand 2017 and 2018 – namely the stationary, the newsletter and the organisation's website –, with the national award being, as in previous editions, the object of a thank you announcement to be included in the edition for the publication of the results.
The editions of the AmbiSUMA newsletter are also accounted for, the development of covers for the presentation of proposals and covers for processes referring to diversified departments, the study of use of the Success Factors brand, the graphic study for the 2018 Annual Report, the congratulations announcements and maintaining close relationships with various media, announcing Happy Holidays and good practices for publication in the press and radio, writing press releases for various campaigns and occasions, developing empathic communications, creating and developing the Happy Holidays electronic postcard, and other support links to external and internal customers and stakeholders as part of the work developed by ICI.
[Initials]
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In early 2019, “H2Ótima” recycled glass water bottles were also distributed in all SUMA structures, for use during meetings, which convey the sustainability values to which the company is committed.
The Environmental Awareness Facebook page maintained its focus on continuity, with hundreds of new publications and almost 18,000 followers.
In addition to the development of new separators based on the deconstruction of myths about waste and/or incorrect conduct with regard to urban cleaning, with regard to clipping, in 2019, the news alluding to SUMA totalled 811,400 euros in AAV (Automatic Advertising Value - advertising value equivalent to the space occupied by the news calculated automatically from the cost of an even page without colour in the press, a second on television or radio, and cost per thousand contacts in the online media), which represents an 58% increase compared to the previous year, a figure that rises by ten percentage points, when taking into account the set of news from SUMA, its area of environmental education and its affiliates.
At the end of the year under analysis, the Institutional Image and Communication area, in a process of partnership with the Training, Quality, Safety and Environment services (SFQSA), produced the video that served as the basis for the internal campaign aimed at consolidating the prevention of risk and alert operators of heavy equipment to safety issues related to the weather conditions of the autumn and winter months, as well as the increase in the number of passers- by on roadways, namely children.
In the beginning of 2020, this area will proceed with the creation of several new institutional supports, namely covers for SUMA documentation, as well as catalogues for SUMA and ECOVISION, with the latter also developing a website in a bilingual format (English and Arabic), which allows it to achieve greater visibility and become a commercial tool with potential new customers.
Economic/Financial Analysis Despite the general positive evolution in the performance of the activities of the companies of the SUMA group, the result shows a fall in 2019, compared to the previous year, very influenced by the negative result of the EGF group.
Consolidated turnover in 2019 was EUR 263,217,062, up 0.68% on the same period of the previous year. As already described in the activity analysis, this increase results from the growth in activity in the areas of industrial waste and urban services, which compensate for the drop in the area of MSW treatment.
Turnover by activity 2017 2018 2019 Variation 18/19 (thousand euros) Collection of municipal solid waste 39,698 37,336 41,190 10.32% Urban cleaning 15,107 16,146 13,982 (13.40%) Treatment and recovery of the MSW 179,815 174,359 176,107 1.00% Collection and treatment of industrial waste 23,933 25,877 22,762 (12.04%) Other 9,242 7,729 8,215 6.29% Total 267,795 261,446 263,217 0.68%
[Initials]
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Despite the drop in operating results at EGF companies, the SUMA group maintains a good performance, boosted by companies in Angola. Earnings before depreciation, financing costs and tax (“EBITDA”) amounted to EUR 53,018,200, which translates into an EBITDA margin of 20.14%, down 5.95 percent. Trading income was EUR 12,338,369, with a net operating margin of 4.69%. Subsidiaries, associated companies and investees continue to make a positive contribution to SUMA’s results and, in 2019, amounted to EUR 14,717,535 under the heading gains from associates.
This year SUMA generated net earnings in the amount of 7,425,253 EUR. Net profitability of sales stood at 2.82%, 2.37% down on 2018.
The company’s ability to maintain positive returns during a period of high financial stress and with circumstantial adversity in MSW treatment concessions, reflects the group’s sound performance and the sustainability of the waste business, which is clearly demonstrated by the key economic and financial indicators.
In 2019, the financial autonomy of the SUMA group stood at 24.74%. When we relate financial liabilities to the sum of equity with the same financial liabilities, we obtain a debt ratio of 70.89%, an increase of 4.07% in relation to the previous year. This increase in the level of indebtedness stems from the need for financing the large investments necessary to comply with the contracts signed and the adequacy of the operation to meet the goals defined for the waste sector. The overall liquidity of the consolidated accounts declines again in 2019, the ratio stands at 75.13%. Despite the inability to generate gains in MSW treatment concessions, at current rates, SUMA's consolidated result remained positive, reaching a return on equity of 4.30%.
Mota-Engil - Ambiente e Serviços, SGPS and URBASER, SA continue to be the only shareholders of SUMA, with 61.5% and 38.5%, respectively.
The subscribed capital of SUMA stands at 12.5 million euros, and the equity value varies according to adjustments in financial assets resulting from application of the equity method of accounting in the subsidiaries and the incorporation of net income for 2019.
Miscellaneous Notes As of the date of this report, the impact of the global spread of COVID-19 should be noted, and it is not possible to quantify the extent of the impact of this crisis on the activities of companies in general at the global level and, therefore, on SUMA. For the protection of workers at the service of companies and for the development of the activity, SUMA and all its subsidiaries have adopted preventive measures, following the best practices, in accordance with the guidelines of the Department of Health and the World Health Organization.
[Initials]
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Outlook
The projections for global growth point to a slow evolution of recovery, but negative risks prevail, with commercial tensions at the global level, sharp deceleration of the main economies and financial disturbances. Uncertainties increased with the COVID-19 pandemic, with economies facing a deep paralysis in the first quarter of 2020, and the impact is still unpredictable, but the effects, in the short term, will surely be harmful in all areas of society. This crisis devastates all countries across the country, with very specific outlines and the current quarantine and the measures that are being recommended in each of the states are the immediate reason for the recession that is already being felt. The economic recovery will depend on the evolution of the pandemic, and the less effective the measures taken are, the greater the risks of a large and persistent recession will be.
The forecasts for the European economy, prior to this outbreak, pointed to the maintenance of a steady but moderate growth path. In Portugal, also according to projections before the pandemic, the economy would continue to expand, albeit at a slower pace. In this new context, with the pandemic of COVID-19, the forecasts point to the possibility of a recession, in the year 2020, whose recovery will depend, in the first instance, on the confinement measures and their duration, on the possibility of new vacancies in the outbreak and also their impact on the loss of productive capacity and international trade. For this reason, the Portuguese economy’s ability to respond in the recovery period and the restoration of confidence are decisive, so that in our desired near future we can return to positive growth rates. Responses to short-term challenges are urgent, but rapid technological transformation is crucial, following a path of innovation and creativity that will reduce dependence on third countries and allow for sustainable growth.
The difficulty in achieving the objectives set out in the strategic plan for urban waste remained throughout this year. The PERSU 2020+ came to mark the extension of the European targets defined for 2020 to be monitored in 2022, with an extension of two more years, a period corresponding to the blocking of European funds, between 2015 and 2017, and new measures were established to fulfil the commitments by 2035. Investments are estimated for the urban waste sector, which may reach 700 million euros, to meet the demands imposed by Brussels. It remains imperative not only to invest in citizenship education programmes, but also to create conditions for the development of circular economy models, in order to contribute positively to the success of policies to reduce the impact of waste on the environment.
With 25 years of acknowledged successes, SUMA has gained recognition of the commitment and role assumed in maintaining the quality of life of the populations, with regard to waste, and its approach of proximity, with citizens and municipalities, which, in some cases, have been partners for almost as long as SUMA has existed. It is based on this acknowledged public credibility, based on the principles of perseverance, flexibility, innovation and best practice, that ambitious goals are taken on that result in a vision that advocates the maintenance of leadership in the domestic market, achieved in a sustainable manner, at the same time as it seeks to consolidate business in international markets.
[Initials]
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SUMA will have to demonstrate its capacity for resilience and evolution in this adverse context, promoting a service with the highest quality and guaranteeing the health security of the populations covered, with superior gains in efficiency and environmental sustainability, In Building a Better Environment.
Closing Remarks
The Board of Directors of SUMA expresses its gratitude to all those who cooperated in the development of our business activities during the year 2019, contributing to its sound performance and the achievement of proposed objectives.
To our shareholders and other members of our Corporate Bodies, we express our thanks for the trust, willingness and support shown, which drive the Company’s successful performance.
To our customers, suppliers and other business partners, we extend our thanks for your cooperation and the maintenance of the good commercial relations established.
A special thanks to the Workers, who demonstrate determination, dedication and competence in the performance of their duties, a factor essential for the success of SUMA.
Lisbon, 29 May 2020.
The Board of Directors
[Signatures]
Eng. José Manuel Mota Neves da Costa Dr. Pablo Barreiro Blanco
Chair Vice-Chairman
Eng. Carlos Alberto Vaz Pinto Garcez Eng. Rui Manuel Fernandes Soares Lopes Eng. Nuno Jorge Sêco da Costa
Director Director Director
CONSTRUCTING A BETTER ENVIRONMENT | 56 66 | SUMA · Consolidated Annual Accounts 2019 Financial Statements
MYTH: Working remotely has no environmental impact.
Remote work guarantees the replacement of daily commuting with occasional or sporadic trips, making the panorama of traf c congestion a chaotic reality of the past.
Organisations gain: The Environment bene ts from:
- eet management costs - air and noise pollution
- fossil fuel consumption + in-line with climate goals
- strain on workers Society sees:
+ work attendance - road accidents
#letsshifttheparadigm 68 | SUMA · Consolidated Annual Accounts 2019 SUMA - SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AT 31 DECEMBER 2019 AND 2018
(Amounts expressed in euros)
ASSETS Notes 2019 2018
NON-CURRENT ASSETS: Tangible fixed assets 7 50 370 608 46 246 617 Investment properties 8 2 498 937 2 497 526 Goodwill 9 10 653 994 11 583 736 Intangible assets 10 360 317 363 304 336 670 Financial interests - equity method 11 38 955 593 33 473 318 Financial interests - other methods 11 - 7 500 Other receivables 15 7 190 273 4 487 081 Customers 15 1 101 498 1 654 343 Other financial assets 4 1 951 737 159 747 Deferred tax assets 13 37 628 555 42 068 652 Total non-current assets 510 668 558 446 515 190
CURRENT ASSETS: Inventories 14 3 694 876 3 364 548 Customers 15 62 855 626 60 370 460 State and other public bodies 16 9 944 839 10 689 257 Other receivables 15 20 484 979 16 912 279 Deferrals 17 5 117 121 7 147 641 Bank deposits and cash 4 84 765 319 102 445 091 Total current assets 186 862 760 200 929 274 Total assets 697 531 318 647 444 464
EQUITY AND LIABILITIES
EQUITY: Subscribed capital 18 12 500 000 12 500 000 Share premiums 19 1 410 000 1 410 000 Legal reserve 19 2 500 000 2 500 000 Other reserves 19 59 135 784 59 135 784 Retained earnings 19 23 497 371 8 470 859 Other changes in equity 19 3 927 444 12 512 445 102 970 599 96 529 088 Net income for the year 34 7 425 253 13 670 655 Equity attributable to company shareholders 110 395 852 110 199 743 Non-controlling interests 20 62 158 374 71 370 735 Total equity 172 554 226 181 570 478
LIABILITIES: NON-CURRENT LIABILITIES: Accrued liabilities 21 10 576 957 8 672 014 Borrowings 22 194 542 917 192 080 118 Deferred tax liabilities 13 46 303 472 47 346 595 Other payables 23 16 203 966 18 387 702 Suppliers 23 133 685 20 584 Deferrals 17 8 484 482 9 872 317 Total non-current liabilities 276 245 479 276 379 330
CURRENT LIABILITIES: Suppliers 23 33 849 088 31 997 561 State and other public bodies 16 25 943 236 22 382 250 Borrowings 22 109 583 559 69 807 102 Other payables 23 73 691 099 61 830 969 Deferrals 17 5 664 631 3 476 774 Total current liabilities 248 731 613 189 494 656 Total liabilities 524 977 092 465 873 986 Total equity and liabilities 697 531 318 647 444 464
The accompanying notes form an integral part of the consolidated balance sheet at 31 December 2019.
THE CERTIFIED ACCOUNTANT THE BOARD OF DIRECTORS [Signatures]
SUMA · Consolidated Annual Accounts 2019 | 69 SUMA - SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME BY NATURE
FOR THE YEARS ENDED 31 DECEMBER 2019 AND 2018
(Amounts expressed in euros)
INCOME AND EXPENSES Notes 2019 2018
Sales and services provided 25 263 217 062 261 446 061 Gains/(losses) attributed to associated companies 11 14 717 535 11 901 346 Variations in production inventories 14 78 574 257 161 Cost of goods sold and materials consumed 14 (20 264 299) (19 455 146) External supplies and services 26 (106 830 664) (97 310 480) Payroll expenses 27 (96 583 272) (89 478 418) Impairment of receivables 15 (313 368) (277 361) Accrued liabilities ((Constituted)/reversed) 21 (1 453 290) (382 657) Other income 28 89 389 937 62 540 771 Other expenses 29 (88 940 015) (61 019 507) Earnings before interest, taxes, depreciation and amortisation 53 018 200 68 221 770
Depreciation and amortization expenses 7, 8, 9, 10 and 30 (41 849 533) (44 275 082) Investment subsidies 19 1 169 702 310 580 Operating income (before financing costs and taxes) 12 338 369 24 257 268
Interest and similar income earned 31 2 188 584 2 896 908 Interests and similar expenses incurred 32 (12 284 132) (12 850 268) Earnings before tax 2 242 821 14 303 908
Income tax for the year 13 (5 337 632) 4 047 887 Net income for the year (3 094 811) 18 351 795
Net income for the year attributable to: Company shareholders 7 425 253 13 670 655 Non-controlling interests 20 (10 520 064) 4 681 140 (3 094 811) 18 351 795
Earnings per share 34 29,70 54,68
The accompanying notes form an integral part of the consolidated statement of income by nature for the year ended 31 December 2019.
THE CERTIFIED ACCOUNTANT THE BOARD OF DIRECTORS
[Signatures]
70 | SUMA · Consolidated Annual Accounts 2019 SUMA - SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME BY NATURE
FOR THE YEARS ENDED 31 DECEMBER 2019 AND 2018
(Amounts expressed in euros)
INCOME AND EXPENSES Notes 2019 2018
Sales and services provided 25 263 217 062 261 446 061 Gains/(losses) attributed to associated companies 11 14 717 535 11 901 346 Variations in production inventories 14 78 574 257 161 Cost of goods sold and materials consumed 14 (20 264 299) (19 455 146) External supplies and services 26 (106 830 664) (97 310 480) Payroll expenses 27 (96 583 272) (89 478 418) Impairment of receivables 15 (313 368) (277 361) Accrued liabilities ((Constituted)/reversed) 21 (1 453 290) (382 657) Other income 28 89 389 937 62 540 771 Other expenses 29 (88 940 015) (61 019 507) Earnings before interest, taxes, depreciation and amortisation 53 018 200 68 221 770
Depreciation and amortization expenses 7, 8, 9, 10 and 30 (41 849 533) (44 275 082) Investment subsidies 19 1 169 702 310 580 Operating income (before financing costs and taxes) 12 338 369 24 257 268
Interest and similar income earned 31 2 188 584 2 896 908 Interests and similar expenses incurred 32 (12 284 132) (12 850 268) Earnings before tax 2 242 821 14 303 908
Income tax for the year 13 (5 337 632) 4 047 887 Net income for the year (3 094 811) 18 351 795
Net income for the year attributable to: Company shareholders 7 425 253 13 670 655 Non-controlling interests 20 (10 520 064) 4 681 140 (3 094 811) 18 351 795
Earnings per share 34 29,70 54,68
The accompanying notes form an integral part of the consolidated statement of income by nature for the year ended 31 December 2019.
THE CERTIFIED ACCOUNTANT THE BOARD OF DIRECTORS
[Signatures]
SUMA · Consolidated Annual Accounts 2019 | 71 72 | SUMA · Consolidated Annual Accounts 2019 SUMA - SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 DECEMBER 2019 AND 2018
(Amounts expressed in euros)
Equity attributable to shareholders in the Company
Other Net Non-controlling Total Paid-up Share Legal Other Retained changes in profit for the interests Notes capital premiums reserve reserves earnings equity for the year Total (Note 20) equity
Balance on 1 January 2018 12 500 000 1 410 000 2 500 000 59 135 784 19 895 893 (837 238) 12 709 684 107 314 123 65 976 902 173 291 025 Application of net income for the year ended 31 December 2017 19 - - - - 12 709 684 - (12 709 684) - - - Net income for the year ended 31 December 2018 ------13 670 655 13 670 655 4 681 140 18 351 795 Exchange rate effect of assets and liabilities held in foreign currency and government grants - - - - - (3 335 185) - (3 335 185) - (3 335 185) Effect of adjustments of associated companies resulting from the application of the equity method 19 - - - - - (15 062 148) - (15 062 148) - (15 062 148) Undistributed Profits 13 and 25 - - - - (24 134 718) 24 134 718 - - - - Grants 18 - - - - - 7 612 298 - 7 612 298 4 889 692 12 501 990 Distribution of dividends 7 and 22 ------(7 428 669) (7 428 669) Other variations 19 ------3 251 670 3 251 670 Balance at 31 December 2018 12 500 000 1 410 000 2 500 000 59 135 784 8 470 859 12 512 445 13 670 655 110 199 743 71 370 735 181 570 478 ------Net income for the year ended 31 December 2019 ------7 425 253 7 425 253 (10 520 064) (3 094 811) Application of net income for the year ended 31 December 2018 19 - - - - 13 670 655 - (13 670 655) - - - Effect of adjustments of associated companies resulting from the application of the equity method 19 - - - - - (9 211 728) - (9 211 728) - (9 211 728) Undistributed Profits - - - - 1 355 857 (1 355 857) - - - - Grants - - - - - 3 868 751 - 3 868 751 5 303 090 9 171 841 Distribution of dividends ------(4 187 853) (4 187 853) Other variations - - - - - (1 886 168) - (1 886 168) 192 466 (1 693 702) Balance at 31 December 2019 12 500 000 1 410 000 2 500 000 59 135 784 23 497 371 3 927 443 7 425 253 110 395 852 62 158 374 172 554 226
The accompanying notes form an integral part of the consolidated statement of changes in equity for the year ended 31 December 2019. THE CERTIFIED ACCOUNTANT THE BOARD OF DIRECTORS
[Signatures]
SUMA · Consolidated Annual Accounts 2019 | 73 74 | SUMA · Consolidated Annual Accounts 2019 SUMA - SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2019 AND 2018
(Amounts expressed in euros)
Notes 2019 2018 OPERATING ACTIVITIES: Receipts from trade debtors 303 934 975 310 586 998 Payments to trade creditors (155 055 496) (139 271 333) Payments to employees (80 979 223) (77 164 243) Cash flow generated from operations 67 900 256 94 151 422 Payment of income tax 826 930 (7 332 737) Other payments (26 985 509) (28 955 363) Flows from operating activities (1) 41 741 677 57 863 322
INVESTMENT ACTIVITIES: Payments concerning: Tangible fixed assets (1 248 638) (1 890 027) Intangible assets (75 449 594) (44 165 262) Loans granted to related parties (3 674 300) - Other financial assets (2 500) (187 477) (80 375 032) (46 242 766) Receivables from: Tangible fixed assets 166 414 23 916 Intangible assets 960 474 660 971 Loans granted to related parties 69 000 - Investment subsidies 19 14 344 816 12 728 545 Interest and similar income 895 267 3 205 408 Dividends 11 134 274 1 064 053 16 570 245 17 682 893 Cash flow from investment activities (2) (63 804 787) (28 559 873)
FINANCING ACTIVITIES: Receivables from: Borrowings from credit institutions 98 051 689 55 999 155 Other financing transactions 4 894 51 842 98 056 583 56 050 997 Payments concerning: Borrowings from credit institutions (75 979 566) (75 411 223) Interest and similar costs (11 199 561) (13 790 734) Dividends 19 and 20 (4 178 715) (5 918 077) Other financing transactions (2 007 717) (75) (93 365 559) (95 120 108) Flows from financing activities (3) 4 691 024 (39 069 111)
Change in cash and cash equivalents (4)=(1)+(2)+(3) (17 372 086) (9 765 661) Restitution/(constitution) of collateral 4 (543 223) (9 314 169) Effect of exchange differences (307 686) (393 350) Cash and cash equivalents at beginning of year 4 84 944 956 104 418 137 Cash and cash equivalents at end of year 4 66 721 960 84 944 956 Captive bank deposit 4 18 043 358 17 500 135 Cash and cash equivalents at end of year 4 84 765 319 102 445 091
The accompanying notes form an integral part of the consolidated statement of cash flows for the year ended 31 December 2019. THE CERTIFIED ACCOUNTANT THE BOARD OF DIRECTORS [Signatures]
SUMA · Consolidated Annual Accounts 2019 | 75 76 | SUMA · Consolidated Annual Accounts 2019 Notes to Consolidated Financial Statements
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#letsshifttheparadigm SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries Notes to Consolidated Financial Statements
At 31 de December de 2019 (Amounts expressed in euros)
78 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
1. INTRODUCTORY NOTE
The SUMA Group (“Group” or “SUMA Group”) is comprised of Suma – Serviços Urbanos e Meio Ambiente, SA (“Company” or “SUMA”) and its subsidiaries (“subsidiaries”) and has as its main activity urban services, both public and private, including, as applicable, the execution of works, studies or projects required for this purpose, either under an administrative concession, lease, operating contract or management contract, or under any other arrangements (including the incorporation of joint enterprises, companies of any kind, cooperatives or other formulas permitted by applicable law), namely: (i) collection and transport of solid and urban waste; (ii) collection and transport of toxic and hazardous waste; (iii) collection and transport of industrial waste; (iv) collection and transport of hospital waste; (v) solid, municipal and industrial waste transfer centres; (vi) cleaning of offices, airports, subways, ports, gardens, industrial facilities, slaughterhouses, markets and all types of facilities, whether public or private; (vii) urban cleaning; (viii) treatment and disposal of solid and urban, industrial, hospital, toxic and hazardous waste; (ix) landfills; (x) treatment, recycling, composting and incineration plants, with or without energy recovery; (xi) maintenance of WTP and WWTP; (xii) street furniture; (xiii) parks and gardens; and (xiv) carriage of goods by road for hire or reward.
As set forth in Note 6, the business group of SUMA and its subsidiaries consists of companies whose main activity is the collection and treatment of solid and municipal waste and concessionaires of multi-municipal waste treatment and recovery systems in partnership with the municipalities.
Due to its shareholder structure, SUMA pursues its operations within the scope of the activities of the Mota- Engil and Urbaser groups, with whom it carries out various transactions, as shown in Note 24.
Under the terms of Decree-Law no 45/2014, of 20 March 2014, the public tender procedure ran its course for the reprivatisation of up to 100% of the share capital of EGF held by the sub-holding of the Águas de Portugal (“ADP”) Group. This reprivatisation operation was divided into two phases: (i) the public tender for the sale of an indivisible batch of Empresa Geral do Fomento, SA (“EGF”) shares representing 95% of its share capital, and (ii) a public offer for the sale of the remaining shares with preferential rights. The transfer of EGF’s share capital to SUMA Tratamento, SA (“SUMA Tratamento”) resulted in a change in the legal framework of the management entities of the multi-municipal waste treatment systems, these being subsidiaries of EGF. Under this scenario, the Government reviewed the legal arrangements applicable to the operations of the management entities of the multi-municipal systems for the treatment and selective collection of municipal waste.
In November 2014, during the constitution of SUMA Tratamento, it entered into an agreement with ADP to acquire 100% of EGF’s capital. The price of the acquisition of 95% of EGF’s capital amounted to approximately 142,400,000 euros, which will be increased by the amounts required to acquire the remaining 5%. The acquisition of EGF’s capital was only concluded in July 2015, as it required a number of actions, in particular a decision by the relevant Competition Authorities not to oppose the operation. In addition, as defined in the acquisition agreement, at the closing date of the operation, the acquisition cost of 95% of EGF’s capital was increased by approximately 12,700,000 euros, mainly as a result of changes in the working capital of EGF and its subsidiaries between the period elapsed and conclusion of the operation.
In August 2017, after the conclusion of the public offering of the remaining preference shares to the work- ers, who only acquired 1,300 shares, the company purchased the remaining 4.99% of EGF’s share capital for an amount of 8,172,328 euros, thus increasing its interest to 99.99% of the share capital.
As a result of the process of privatising EGF, changes were made to the legal framework of the management entities of the multi-municipal systems for the treatment and selective collection of municipal waste, which are controlled by EGF (“concessionaires”).
In April 2020, the concessionaires delivered to the regulator the actual regulated accounts for the year 2019, which showed a tariff adjustment in relation to the amounts initially approved and the tariffs practised in that year.
It is the understanding of the Board of Directors that the estimated adjustment of tariffs for 2019 by the reg- ulator should not result in significant differences compared to the amounts determined by the subsidiaries. The accompanying consolidated financial statements are presented in euros, as this is the currency used in the economic environment in which the company operates.
These consolidated financial statements were approved by the Board of Directors at the meeting held on 29 May 2020, but they also require the approval of the General Meeting. It is the opinion of the Board of Direc-
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tors that these consolidated financial statements give a true and fair account of the group’s consolidated operations, as well as its financial performance and cash flows.
2. ACCOUNTING FRAMEWORK FOR PREPARING THE FINANCIAL STATEMENTS
Accounting standards
The accompanying consolidated financial statements were prepared in accordance with the provisions in force in Portugal, in accordance with Decree-Law no. 98/2015 of 2 June, which amended Decree-Law no. 158/2009 of 13 July, and in accordance with the conceptual structure, the Accounting and Financial Reporting Standards (“NCRF”) and the Interpretative Standards (“NI”) laid down, respectively, in notices 8254/2015, 8256/2015 and 8258/2015, of 29 July 2015, which together constitute the Accounting Standards System (“SNC”).
It should also be mentioned that the model of the financial statements and the chart of accounts were also amended, respectively, by Ordinance no. 220/2015, of 24 July 2015, and Statement of Correction no. 41- B/2015, of 21 September 2015, and Ordinance no. 218/2015 of 23 July 2015, and Statement of Correction no. 41-A/2015, of 21 September 2015.
Hereafter, all such standards and interpretations will be referred to generically as the “NCRF” or the “SNC”.
The SNC provides that, where the NCRF does not meet the needs of users in terms of the accounting treatment of certain situations, they should first of all refer to the International Financial Reporting Standards (“IFRS”), as adopted by the European Union, and then to other IFRS not yet adopted by the European Union.
In this context, the interpretation of the International Accounting Standards Board (“IASB”) in relation to this subject matter, as expressed in IFRIC 12 - Service Concession Arrangements (“IFRIC 12”), is understood to be applicable to the case of public service concessions in general, and to the case of subsidiaries of the EGF subgroup in particular.
Comparability of the financial statements
The information contained in these financial statements are, in their entirety, comparable with those of the previous year, which are presented for purposes of comparison in these financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES
The main accounting policies adopted in preparing the attached consolidated financial statements are as follows:
3.1. Bases of presentation
The consolidated financial statements have been prepared according to the going concern principle, based on the accounting records of the companies included in the consolidation, maintained in accordance with the NCRF.
Management has assessed the Group’s capacity to operate on a continuing basis, based on all relevant information, facts and circumstances of a financial, commercial or other nature, including events subsequent to the date of reference of the consolidated financial statements, available regarding the future. As a result of the evaluation, Management has concluded that the group has adequate resources to maintain its activities and has no intention of ceasing trading in the short term, as a result of which use of the going concern principle in the preparation of the consolidated financial statements was deemed appropriate.
3.2. Business combinations and consolidation principles
Consolidation principles
The consolidated financial statements incorporate the financial statements of the Company and the entities it controls. Control is understood to exist where the company has the power to define the operational financial policies of an entity in order to obtain benefits derived from its activities, usually associated with direct or indirect control of more than half of the voting rights. The existence and effect of potential voting
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rights that are currently exercisable or convertible are considered in the assessment of the control that the company holds over an entity.
Subsidiaries are included in the consolidated financial statements using the full consolidation method, from the date on which the company assumes control over its financial and operating activities until such time as that control ceases.
The results of subsidiaries acquired or sold during the period are included in the consolidated statement of income from the date of their acquisition until the date of their sale.
All transactions and balances between subsidiaries and between the company and subsidiaries, as well as the income and expenses resulting from such transactions and balances, are completely cancelled during the consolidation process. Unrealised losses are also eliminated, but considered as an indicator of impairment for the transferred asset.
The equity and net income of the subsidiaries corresponding to the interests of minority third parties in them are presented separately in the consolidated balance sheet and in the consolidated statement of income, respectively, under “Non-controlling interests”.
Non-controlling interests are initially measured by the corresponding share in the fair value of the net assets acquired. Subsequently, they are adjusted by the corresponding share in the subsequent variations in the equity of the subsidiaries.
Financial investments in associated companies
An associate is an entity over which the group has significant influence and which is neither a subsidiary nor a jointly controlled undertaking. Significant influence means the power to participate in decisions relating to the financial and operational policies of the associate, without this resulting in joint control or control by the group.
Financial investments in associated companies are recorded using the equity method. According to the equity method, financial holdings in associated enterprises are recorded initially at acquisition cost and subsequently adjusted in accordance with corresponding changes in the group’s share in the equity of the associated companies after acquisition. The results of the group include the part that corresponds to it in the results of the associated companies.
The excess of the acquisition cost over the fair value of the identified assets and liabilities of each associate on the date of acquisition is recognised as goodwill and is presented separately on the consolidated balance sheet. If the difference between the acquisition cost and the fair value of the net assets and liabilities acquired is negative, this is recognised as income for the year.
An assessment of investments in associated companies is conducted where there is evidence that the asset may be impaired, and the confirmed impairment losses that are proved to exist are then recorded as expenses in the consolidated statement of income.
Where the group’s share of accumulated losses of the associated enterprise exceeds the value at which the investment is recorded, the investment is recorded at nil value, except where the group has entered into commitments to cover the losses of the associate. If the associate subsequently reports profits, the company resumes recognition of its share in those profits only after its share of profits equals its part of the unreported losses.
Unrealised gains on transactions with associated companies are eliminated in proportion to the group’s interest in them. Unrealised losses are similarly eliminated, but only to the extent that the loss does not result from a situation in which the transferred asset is impaired.
Investments in other investees
Financial investments in other investees are recorded at acquisition cost less any impairment losses.
Business combinations
The acquisitions of subsidiaries and jointly controlled entities are recorded using the purchase method. The corresponding cost of the combination is determined as the aggregate, on the acquisition date, of: (a) the fair value of the assets delivered or to be delivered; (b) the fair value of liabilities incurred or assumed; (c) the fair value of equity instruments issued by the Group in exchange for obtaining control over those 65
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entities; and (d) the costs directly attributable to the acquisition (the latter only relate to acquisitions to 31 December 2015). With effect from 1 January 2016, costs directly attributable to the acquisition are reported in the consolidated statement of income.
The excess of the cost of the combination over the fair value of the group’s interest in the identifiable assets acquired is recorded as goodwill. If the cost of the combination is less than the fair value of the net assets of the acquired subsidiary, the difference is recognised directly in the consolidated statement of income. Where applicable, the cost of the merger or acquisition includes the effect of contingent and/or additional payments agreed upon under the transaction.
Where the initial accounting of an acquisition has not been completed at the end of the reporting period in which it occurred, the group reports provisional amounts for those incomplete items. Such provisional amounts may be adjusted for a period of 12 months from the date of purchase.
Goodwill
Goodwill is measured as the excess of the acquisition cost of equity investments against the fair value of identifiable assets and liabilities of each entity acquired on the acquisition date, and is presented on a separate balance sheet line.
The estimated useful life of goodwill for the various investments is as follows:
Investment Years ECOATLÂNTICA de Portugal, Lda ("ECOATLÂNTICA") (a) 19 ENVIROIL, SGPS, Lda ("ENVIROIL") 19 RESILEI - Tratamento de Resíduos Industriais, SA ("RESILEI") 10 Sociedade de Transportes e Limpeza, Lda ("STL") 6 TRIU - Técnicas de Resíduos Industriais e Urbanos, SA ("TRIU") 14
(a) Company subsequently merged into ERSUC – Resíduos Sólidos do Centro SA (“ERSUC”).
Goodwill is recognised as an asset on the date control is acquired. Subsequently, the goodwill is amortised, but is subject to impairment testing whenever there is evidence of impairment.
For the purpose of impairment testing, goodwill is allocated to cash-generating units of the Group that benefit from synergies resulting from the consolidation. The cash-generating units to which goodwill has been allocated are subject to annual or more frequent impairment tests (in the event of any indication that the unit may be impaired). If the recoverable amount of the cash-generating unit is less than the corresponding net book value, the resulting impairment loss is initially allocated to goodwill, with the remainder being allocated in proportion to the remaining assets of the cash-generating unit. Impairment losses charged to goodwill are not subsequently reversed.
Translation of financial statements of foreign entities
Companies operating overseas, and having organisational, economic and financial autonomy, are treated as foreign companies.
The assets and liabilities of the financial statements of foreign entities are translated into euros using the exchange rates prevailing at the balance sheet date. The income, expenses and cash flows of the financial statements of foreign entities are translated into euros using the average exchange rate for the year. The exchange rate difference resulting from the conversion is recorded in equity under the item “Other changes in equity”.
Goodwill and fair value adjustments resulting from the acquisition of foreign entities are treated as assets and liabilities of that acquired entity and translated to euros at the exchange rate prevailing at the balance sheet date.
Whenever a foreign entity is disposed of, the currency translation reserve accumulated in equity is recognised in the consolidated statement of income as a gain or loss on the disposal.
The prices used for translation into euros of the consolidated financial statements of foreign operations were as follows:
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Closing exchange rate Average exchange rate Currency 2019 2018 2019 2018
American dollar 1,1234 1,145 1,1185 1,179317 Kwanza 536,2617 353,0155 414,8919 303,6658 Zloti 4,2568 4,3014 4,298983 4,2684 Cape Verdean Escudo 110,265 110,265 110,265 110,265 Mozambican Metical 68,7 70,24 69,43667 71,2933 Omani Rial 0,43223 0,44081 0,430768 0,454 Brazilian Real 4,5157 4,444 4,417808 4,3294 Macanese Pataca 9,0097 9,2365 9,032317 9,5163 Hong Kong Dollar 8,7473 8,9675 8,761558 9,2438
3.3. Tangible fixed assets
Tangible fixed assets are initially recorded at acquisition cost, which includes the purchase cost and any costs directly attributable to the activities necessary to place the assets in the location and condition necessary to operate as intended.
The useful lives and depreciation method of various goods are reviewed annually. The effect of any change in these estimates is recognised prospectively in the consolidated statement of income.
Depreciation is calculated after the time at which the asset is ready for use. Tangible fixed assets allocated to the operation of landfills, namely land and basic equipment, are depreciated on the basis of the tonnage deposited and taking into account the available capacity of the landfills. The remaining tangible fixed assets are depreciated using the straight-line method, in accordance with the estimated useful life of each group of assets, as follows:
Homogeneous class Years
Land and natural resources 0 - 20 Buildings and other structures 8 - 20 Basic equipment 3 - 5 Transport equipment 2 - 10 Office equipment 3 - 8 Other tangible fixed assets 5 - 10
Depreciated land and natural resources correspond to landfills, whose estimated useful life is up to 20 years.
Maintenance and repair costs (subsequent expenditures) that are not likely to generate additional future economic benefits are recorded as expenses in the period in which they are incurred.
3.4. Leases
Leases are classified as financial whenever their terms substantially transfer all the risks and rewards associated with ownership of the asset to the lessee. All other leases are classified as operating leases. The classification of leases is made according to the content rather than the form of the contract.
Assets acquired under finance lease contracts, as well as corresponding liabilities, are recorded at the inception of the lease at the lower of the fair value of the assets and the present value of the minimum lease payments. Financial leases are divided between financial charges and reductions of liability, in order to obtain a constant interest rate on the outstanding balance of the liability.
Operating leases are recognized as expenses on a straight-line basis over the lease term.
3.5. Investment properties
Investment properties comprise land and a unit of a property, both held for lease, appreciation of the capital invested through sale and not for use in the production or supply of goods and services or for non- depreciable administrative purposes. 67
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Investment properties are measured at cost, including transaction costs.
The expenses incurred relating to investment properties, such as maintenance, repairs, insurance and property taxes are recognised as an expense in the period concerned. The improvements to investment properties with regard to which there are expectations that they will generate additional future financial benefits are capitalised under “Investment properties”.
3.6. Intangible assets
Intangible assets are recorded at cost and correspond to: (i) computer programs, (ii) the remuneration established in the contract for services concluded with Porto Municipal Council and paid upon execution, less accumulated depreciation and (iii) service concession arrangements falling under IFRIC 12.
Depreciation is recognised on a systematic/straight-line basis over the estimated useful life of the intangible assets. The useful lives and method of amortisation of the various intangible assets are reviewed annually. The effect of any changes to these estimates is recognized prospectively in the statement of income.
Intangible assets are amortised using the straight-line method, during a three-year period for computer programs and, for the remainder, for the period of the concession contract.
Assets of the concession – IFRIC 12 – Service concession arrangements
The assets acquired/constructed by the Concessionaires, under the concession agreement, are assets allocated to the concessions, corresponding to the respective infrastructure under concession.
IFRIC 12 applies to public service concession contracts in which the grantor controls (regulates):
- the services to be provided by the concessionaire (through the use of infrastructure), to whom and at what price; and - any residual interests in the infrastructure at the end of the contract.
IFRIC 12 applies to infrastructure:
- constructed or acquired by the operator from third parties; - already existing and to which the operator is given access.
Accordingly, and in view of the above, the Concessionaires’ concessions fall within the scope of this IFRIC for the following reasons:
- the Concessionaires have public service concession contracts entered into with the Portuguese State (“Grantor”) and for a predefined period; - the Concessionaires provide public services through the use of infrastructures as defined in detail in Note 10; - the grantor controls the services provided and the conditions under which they are provided, through the regulator ERSAR; - the various assets used to provide the services revert to the grantor at the end of the concession agreements.
This interpretation establishes the general principles of recognition and measurement of rights and obligations under concession contracts with the characteristics mentioned above and define the following models:
i) Financial asset model - where the operator has an unconditional contractual right to receive cash or an- other financial asset from the grantor, corresponding to specific or determinable amounts, the operator must record a financial asset (receivable). Under this model, the grantor has few or no discretionary powers to avoid payment, as the agreement is generally legally binding.
ii) Intangible asset model - where the operator receives from the grantor the right to charge a fee based on use of the infrastructure, it must recognise an intangible asset.
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iii) Mixed model - this model applies when the concession includes both remuneration commitments guar- anteed by the grantor and remuneration commitments depending on the level of use of the concession infrastructure.
Accordingly, and in view of the concession contract terms, namely with regard to the remuneration model, it was understood that the Concessionaires’ operations form part of the intangible asset model as a result, essentially, of the Concessionaires who have the unconditional right of charging their users and assume the operational, investment and financing risks of the concession.
Within this framework and in relation to the residual value of the assets assigned to the concession (ac- cording to the concession agreements, the concessionaires are entitled to reimbursement at the end of the concession based on the net book value of the concession assets), this was likewise incorporated as part of the intangible asset, and remunerated annually in accordance with the tariff regulations in force.
In view of the aforementioned framework, the assets assigned to the concession (intangible assets) are stated at acquisition or production cost, less accumulated depreciation and impairment losses. Deprecia- tion is recognised on a systematic/straight-line basis over the estimated useful life of the intangible assets. The effect of any changes to these estimates is recognized prospectively in the statement of income.
For purposes of amortisation of the assets assigned to the concession, the method that reflects the model by which the future economic benefits of the assets are expected to be consumed by the Group companies was taken into account. Accordingly, and in view of the above, the Group considers that the amortisation method that best reflects the expected consumption pattern of the future economic benefits of the intangi- ble asset is the amortisation based on the depreciation rates defined and approved by the regulator (ERSAR), as this is the basis of their annual income, that is, the assets under concession are amortised in accordance with the remuneration model underlying the Tariff Regulations.
It should also be noted that, under the concession contract, the concessionaires may charge tariffs accord- ing to the costs incurred with infrastructure. Thus, taking into account the tariff calculation methodology, the remuneration basis is calculated taking into account each specific asset item under concession, which pre- supposes the need to componentise the right. Consequently, it is considered that the right is compo- nentisable into distinct parts as the various bases of remuneration are realised.
In this way, the intangible asset is being increased as the various infrastructures allocated to the conces- sion are realised, being recorded based on their acquisition/construction cost and reduced as the future economic benefits are consumed.
In relation to investment subsidies assigned to assets, these are recognised in the income statement at the same rate as the amortisation of assets.
Under the current concession contract, the construction activity is subcontracted externally to specialised entities. Therefore, the group does not have any margin in the construction of assets assigned to conces- sions, so revenue and costs of acquiring these assets are equal (Notes 28 and 29).
3.7. Impairment of tangible and intangible fixed assets and investment property
At each reporting date, the carrying amounts of the group’s tangible and intangible fixed assets are reviewed to determine if there is any indication that they may be impaired and whether they should be subject to impairment testing.
Where there is any indication that the group’s tangible and intangible fixed assets may be impaired, an estimate of their recoverable amount is made to determine the extent of the impairment loss (if applicable). Where it is not possible to determine the recoverable value of an individual asset, the recoverable value of the cash-generating unit to which that asset belongs is estimated.
The recoverable value of the asset or cash-generating unit consists of the greater of: (i) the fair value less selling costs; and (ii) the current use value. In determining the current use value, estimated future cash flows are discounted using a discount rate that reflects the market’s expectations regarding the time value
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of money and the specific risks of the asset or cash-generating unit for which estimates of future cash flows have not been adjusted.
Where the net book value of the asset or cash-generating unit exceeds its recoverable value, an impairment loss is recognised. Impairment losses are recorded immediately in the statement of income, unless such loss offsets a revaluation surplus recorded in equity. In the latter case, such a loss is treated as a decrease in that revaluation.
Impairment losses recognized in previous years are reversed where there is evidence that the impairment losses recognized previously no longer exist or have decreased. The reversal of an impairment loss is recognised in the statement of income. The impairment loss is reversed up to the amount that would be have been recognised (net of amortisation) if the loss had not been recorded.
3.8. Inventories
Commodities, as well as consumable materials, are valued at acquisition cost, using the average cost costing method.
By-products and work in progress are valued at their production cost.
Net realisable value represents the estimated selling price less any estimated costs required to complete the inventories and sell them. In situations where the cost value is higher than the net realisable value, impairment losses are recorded for the respective difference.
Changes in the year in impairment losses on inventory are recorded under “Impairment of inventories”.
3.9. Income tax
Income taxes correspond to the sum of current taxes plus deferred taxes. Current taxes and deferred taxes are recorded in income, except where the deferred taxes relate to items recorded directly in equity. In these cases, deferred taxes are also recorded in equity.
Current income tax is calculated based on the taxable income for the year. Taxable income differs from accounting income, as it excludes various expenses and income that will only be taxable or deductible in subsequent years, as well as expenses and income that are never taxable or deductible based on the prevailing tax laws.
Deferred taxes refer to temporary differences between the amounts of assets and liabilities for accounting purposes and the respective amounts for tax purposes, as well as the results of tax exemptions or reductions obtained and temporary differences between the result for tax purposes and the accounting result.
Deferred tax liabilities are generally recognised for all taxable temporary differences.
Deferred tax assets are recognised for deductible temporary differences, but such recognition only occurs where there are reasonable expectations of future taxable profits sufficient to utilise those deferred tax assets. At each reporting date, these deferred tax assets are reviewed and adjusted based on expectations of their future use.
Deferred tax assets and liabilities are measured using the tax rates that are expected to be effective on the date of the reversal of the corresponding temporary differences, based on the tax rates (and tax legislation) that were formally issued at the reporting date.
SUMA is covered by the special scheme for the taxation of groups of companies (“RETGS”), which covers all companies in which SUMA has a direct or indirect interest of at least 75% of share capital, and which comply simultaneously with the remaining conditions laid down under that scheme. The other investees, which are not subject to the special tax scheme of the SUMA Group, are taxed individually, based on their respective taxable income and applicable tax rates.
3.10. Financial assets and liabilities
Financial assets and liabilities are recognised in the balance sheet where the Group becomes a party to the corresponding contractual provisions, with NCRF 27 – Financial instruments being used for this purpose.
a) Trade accounts receivable and other receivables
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The balances of trade accounts receivable and other receivables are initially recorded at fair value and subsequently at amortised cost less any impairment losses.
The balances of trade accounts receivable and other receivables are subject to impairment testing at each reporting date. Such financial assets are impaired where there is objective evidence that, as a result of one or more events occurring after their initial recognition, their estimated future cash flows have been affected.
b) Bank deposits and cash
The amounts included under “Cash and bank deposits” correspond to cash amounts, bank deposits and time deposits that mature in less than three months for which the risk of a change in value is insignificant and which are immediately convertible into cash. These assets are measured at amortised cost.
c) Borrowings
Borrowings are recorded under liabilities at amortised cost.
Any expenses incurred in obtaining these loans, as well as interest charges and similar expenses, are recognised by the effective interest method in results for the year over the life of such loans. The expenses incurred, while not recognised, are included to be deducted from the carrying amount of the loans obtained.
d) Trade creditors, other payables and other financial liabilities
The balances of trade creditors and other payables are carried at amortised cost.
Impairment of financial assets
The financial assets are subject to impairment testing at each reporting date. Such financial assets are impaired where there is objective evidence that, as a result of one or more events occurring after their initial recognition, their estimated future cash flows have been negatively affected.
For financial assets measured at amortised cost, the impairment loss to be recognised represents the difference between the net book value of the asset and the present value of the new estimated future cash flows discounted at their original effective interest rate.
Impairment losses are recognised in income in the period they are determined. Subsequently, if the amount of the impairment loss decreases and the decrease can be related objectively to an event that took place after the recognition of the loss, this should be reversed by results. The reversal should be carried out up to the limit of the amount that would be recognised (amortised cost) if the loss had not been initially registered. The reversal of an impairment loss is reflected in income.
Derecognition of financial assets and liabilities
The group derecognises financial assets only when the contractual rights for cash flows expire, or when transferring the control of these financial assets and all risks and significant benefits associated with its benefits to another entity. Transferred financial assets relating to which that the Group retained some significant risks and benefits are derecognised, provided that the control over them has been ceded.
The group derecognises financial liabilities only when the corresponding obligation is settled, cancelled or expires.
3.11. Transactions and balances in foreign currency
Transactions in foreign currency (a currency other than the functional currency of the company) are recorded at the exchange rates prevailing at the transaction dates. At each reporting date, the monetary items denominated in foreign currency are restated at the exchange rates at that date.
The exchange differences resulting from the aforementioned restatements are recorded in the consolidated statement of income of the period in which they are generated.
At 31 December 2019 and 2018, the exchange rates referred to under Note 3.2 were used to translate the assets and liabilities denominated in foreign currency into euros, as well as the transactions occurring during the years ended at that date.
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3.12. Investment grants
Government grants are only recognised where there is reasonable certainty that the group will comply with the terms of their granting and that they will be received.
Non-repayable Government grants received, relating to the acquisition of tangible and intangible assets are initially recognised in equity, together with their deferred tax liabilities, on a systematic basis as income for the year, in a manner consistent and proportional to the depreciation of the assets for which they are intended.
Operating grants, particularly for the training of employees, are recognised in the consolidated statement of income in accordance with the expenses incurred.
3.13. Accrued liabilities, contingent liabilities and contingent assets
Accrued liabilities
Accrued liabilities are recognised only where the group has a present obligation (legal or implicit) resulting from a past event, it is probable that the settlement of this obligation will result in an outflow of resources and the amount of the obligation may reasonably be estimated.
The amount of accrued liabilities recognised consists of the present value of the best estimate at the reporting date of the resources required to settle the obligation. This estimate is determined taking into account the risks and uncertainties associated with the obligation. Accrued liabilities are reviewed at the reporting date and adjusted to reflect best estimates at that date.
Contingent liabilities
Contingent liabilities are not recognised in the consolidated financial statements, but are disclosed where an outflow of resources encompassing economic rewards is deemed neither unlikely nor likely.
Contingent assets
Contingent assets are not recognised in the consolidated financial statements, but are disclosed where a future economic inflow is likely.
3.14. Financial charges on borrowings
Financial charges related to borrowings are recognised as expenses as they are incurred.
3.15. Non-current assets held for sale
Non-current assets for disposal are classified as held for sale where their book value is essentially recovered through a sale and not through their continued use.
This condition is deemed to occur only where the sale is highly likely and the non-current asset is available for immediate sale under its present conditions. The corresponding sale must be completed within one year of the date of classification of the non-current asset as available for sale.
Non-current assets classified as held for sale are measured at the lower of their book value before classification and their fair value less selling costs.
3.16. Employee benefits
The EGF benefit plan for already retired former employees is limited to the payment of a supplement to the retirement pension (due to old age or disability) granted by Social Security. Liabilities under the retirement pension supplement are financed through an established independent fund, managed independently by a financial institution.
A defined-benefit plan is a pension plan that defines the amount of pension benefit that an employee will receive in retirement, usually dependent on one or more factors such as age, years of service and compensation.
The defined-benefit plan obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by the discount of the future payment of the benefits using the interest rate of high quality bonds denominated in the same 72
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currency in which the benefits will be paid and with terms of maturity that approximate those of the liability assumed. The liability recognised in the consolidated balance sheet in relation to the defined-benefit plan is the present value of the defined benefit obligation at the balance sheet date, less the fair value of the assets of the plan, together with adjustments related to past service costs.
Actuarial gains and losses, resulting from adjustments based on experience and changes in actuarial assumptions, are recognised in the year in which they are incurred in the consolidated statement of changes in equity.
Since 1 January 2007, EGF has changed the “defined benefit” pension fund to a “defined contribution” pension fund for current employees and is based on a contribution from EGF calculated as a percentage of the pensionable salary of each employee, provided that the latter meets the conditions necessary to be eligible by the Plan. Under this “Defined Contribution” plan, the pension plan expense is fixed at the outset. The contributions made by EGF to defined contribution plans are recorded as an expense on the date they fall due.
3.17. Accruals
In accordance with the accrual basis, expenses and income are recognised in the period to which they relate, regardless of when the transactions are invoiced. Expenditures and income whose actual value is not known are estimated.
Expenditures and income attributable to the current period and whose expenses and revenues will only occur in future periods, as well as expenses and revenues that have already occurred, but which relate to future periods and which will be allocated to the results of each of these periods, at the corresponding values, are recorded under Other payables, Other receivables and Deferred charges.
3.18. Revenue
Revenue is measured based on the fair value of the consideration received or receivable. The revenue recognised is deducted from the amount of returns, discounts and other rebates and does not include VAT and other taxes settled in relation to the sale. Revenue from the sale of energy and recoverable products is recognised when all of the following conditions are met:
All the significant risks and rewards associated with the ownership of the goods were transferred to the buyer; The group does not retain any control over the goods sold; The amount of revenue can be measured reliably; Future economic benefits associated with the transaction are likely to flow to the group; The expenses incurred or to be incurred with the transaction can be reliably measured.
Revenue originating from the rendering of services is recognised with reference to the stage of completion of the transaction/service at the reporting date, provided that all of the following conditions are met:
The amount of revenue can be measured reliably; Future economic benefits associated with the transaction are likely to flow to the Group; The expenses incurred or to be incurred with the transaction can be reliably measured; The stage of completion of the transaction/service at the reporting date can be reliably measured.
Additional works and price reviews are recognised as revenue where they are agreed and accepted by customers, taking into consideration compliance with the conditions set out above.
The companies belonging to the EGF subgroup have the tariff supported by the annual approval of the grantor and the regulator.
The recognition of the revenue for the concessionary activities is based on the approved tariff of the regula- tor (ERSAR) determined by the revenues allowed on the basis of the quantities of waste from the undiffer- entiated collection. The tariff has the purpose of recovering: iv) The amortisation of concession assets associated with the regulated activity; ii) Return on the average accounting value of the assets associated with the regulated activity, according to the rates defined by the regulator; 73
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v) The operating costs associated with the regulated activity.
Tariff Adjustments
The tariff regulation, issued by the ERSAR, defines the formula for calculating permitted revenues from regulated activities and includes in this calculation formula the calculation of tariff adjustments that are re- covered until the second year after the date on which they are generated, thus defining the period in which these deviations are recovered.
Accordingly, the concessionaires determine, on each reporting date and in accordance with the criteria de- fined by the tariff regulation published by ERSAR, the deviations calculated between the allowable reve- nues recalculated based on actual amounts and revenues billed.
In view of the legislation and regulatory framework in force described above, the tariff adjustments calculat- ed by the group in each year comply with a set of characteristics (reliability of measurement, right of recov- ery, transferability thereof and interest rate) that support its recognition as revenue, and as assets, in the year in which they are accrued. Such rationality is also valid when tariff adjustments are to be delivered (payable), which are configurable as liabilities and less revenue.
Any arrears interest charged to customers is recognized as revenue where it is paid by customers.
3.19. Regulatory assets/ Regulatory liabilities
On 1 January 2016, and taking as reference the financial statements as of 31 December 2015, the conces- sionaires assessed the existence of a liability to the grantor (“Regulatory balance”), which is determined by reference to the amounts of the additions of expenses related to accumulated amortisation of contractual investment to be realised, less the amount of deferred tax associated with it and the net book value of amortisation and grants of the group of goods and assets that do not form part of the relevant regulated as- set base for purposes of determining allowable returns. In cases where that amount was negative, that lia- bility, or “Regulatory Liability”, was recorded in liabilities, and where positive, a “Regulatory Asset, or Con- tractual Right” was recorded. Subsequently, when an annual rate of variation in tariffs of more than 2% is estimated on the annual revenue allowed for the concessionaires, the excess amount may be deducted from the Regulatory Liability, where applicable. At the end of the concessions, if Regulatory Liabilities still exist, the corresponding amount will be deducted from the residual value of the BAR to which the conces- sionaires will be entitled. In cases where a “Regulatory assets” has been determined, this is amortised over the concession period.
3.20. Value judgements, critical assumptions and key sources of uncertainty associated with estimates
In the preparation of the accompanying consolidated financial statements, value judgements and estimates were made and various assumptions were used that affect the book value of the assets and liabilities, as well as the income and expenses for the period.
The estimates and underlying assumptions were determined based on the best knowledge available at the date of approval of the consolidated financial statements regarding current events and transactions, as well as on the experience of past and/or current events. However, unexpected situations may arise in subsequent periods that were not considered in the estimates at the date of approval of the consolidated financial statements. Changes to the estimates made after the date of the consolidated financial statements will be corrected prospectively. For this reason and given the degree of uncertainty associated with the actual results of the transactions in question, they may differ from the corresponding estimates.
The main value judgements and estimates made in the preparation of the accompanying consolidated financial statements were as follows:
- Useful lives of tangible fixed assets; - Useful lives of tangible assets; - Impairment tests on Goodwill and on tangible assets; - Impairment losses on accounts receivable; - Registration of deferred taxes; - Tariff deviation - Record of accrued liabilities. 74
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3.21. Events after the balance sheet date
Events after the balance sheet date that provide additional information regarding conditions that existed at the balance sheet date are reflected in the financial statements. Events after the balance sheet date that provide additional information about conditions that came about after the balance sheet date, are disclosed in the financial statements, if they are considered as significant.
3.22. Statement of cash flows
The cash flow statement is prepared in accordance with the direct method. The group classifies assets with a maturity of less than three months in the heading "Cash and cash equivalents" and for which the risk of change in value is insignificant. For the purposes of the statement of cash flows, the heading “Cash and cash equivalents” also includes bank overdrafts, included under the balance sheet caption borrowings.
The statement of cash flows is classified into operating, investment and financing activities.
Operating activities include collections from customers and the payments to suppliers, to staff and others related to operating activities.
Cash flows covered under investing activities include, namely, receipts and payments resulting from the purchase and sale of intangible and tangible assets, if applicable.
Financing activities include, namely, payments and receipts relating to borrowings, financial leasing con- tracts and dividend payments.
4. CASH AND BANK DEPOSITS AND OTHER FINANCIAL ASSETS
For the purposes of the consolidated statement of cash flows, cash and cash equivalents include cash and immediately drawable bank deposits (having a maturity less than or equal to three months), with bank overdrafts being classified as financing activities, due to their permanent nature in the financing structure of the group. Cash and cash equivalents as of 31 December 2019 and 2018 may be broken down as follows:
2019 2018
Cash 201 051 112 820 Immediately drawable bank deposits 26 402 894 49 875 143 Other cash at bank 40 118 016 34 956 993 Cash and cash equivalents 66 721 960 84 944 956
Captive deposits 18 043 358 17 500 135 84 765 319 102 445 091
As of 31 December 2019 and 2018, the heading “Captive bank deposits” amounting to 18,043,358 euros and 17,500,135 euros respectively, was not available for use by the Group, whereby 7,719,005 euros and 7,349,056 euros respectively correspond to a counter-guarantee provided to several credit institutions in the form of captive bank deposits to guarantee the full and timely fulfilment of the obligations arising from the loan agreements concluded with the European Investment Bank (“EIB”), (Note 22). These will only be used to repay principal and/or pay interest and other bank charges under this loan agreement. The amount of these deposits must have a minimum balance of not less than the sum of principal, interest and other bank charges payable by the Group to the EIB in the next 6 months, in accordance with the payment plan established in the contract. Additionally, as of 31 December 2019, an amount of 10,004,209 euros should be added, which relates to the Caixa Geral de Depósitos guarantee arising from factoring contracts (Note 22), and 320,144 referring to deposits given as collateral in favour of CCDR.
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5. CHANGES IN ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND ERRORS
During the year ended 31 December 2019 there were no accounting policy changes in relation to those used in the preparation of the financial statements for the year ended 31 December 2018, nor were there any material errors or significant changes in accounting estimates relating to previous years.
6. INVESTMENTS IN SUBSIDIARIES, ASSOCIATED COMPANIES AND AFFILIATES
Subsidiaries
The company and the following subsidiaries, in which the majority of voting rights (control) is held or controlled, were included in the consolidation, using the full consolidation method, as of 31 December 2019 and 2018:
Percentage Percentage Date of Date of Company name Head office Interest 2019 Interest 2018 M ain activity establishment acquisition
SUM A - Servicios Urbanos e M eio Ambiente, SA Lisbon - - Collection and treatment of jun/94 - ("SUM A" - parent company) solid waste
CITRAVE - Centro Integrado de Resíduos de Aveiro, SA ("CITRAVE") Lisbon 100,00 100,00 Treatment and disposal of dez/08 - Through SUM A 99,85 99,85 other non-hazardous waste Through NOVAFLEX - Técnicas do Ambiente, SA ("NOVAFLEX") 0,08 0,08 Through SUM A (Esposende) - Serviços Urbanos e M eio Ambiente, Lda 0,08 0,08 ("SUM A Esposende")
CORREIA & CORREIA, Lda. ("CORREIA & CORREIA") Sertã 78,35 78,35 Trade and collection of waste - nov/09 Through ENVIROIL 78,35 78,35 oils
Ekosrodowisko Spólka z.o.o. ("Ekosrodowisko") Poland 100,00 100,00 Collection of municipal solid - dez/05 Through M ES (Bytom) 100,00 100,00 waste
ENVIROIL, SGPS, Lda ("ENVIROIL") Torres Novas 78,35 78,35 Recycling of waste oils and - nov/09 Through SUM A 78,35 78,35 electricity production
INVESTAM BIENTE - Recolha de Resíduos e Gestão de Lisbon 52,00 52,00 Collection of other non- jan/00 - Sistemas de Saneamento Básico, SA ("INVESTAM BIENTE") hazardous waste Through NOVAFLEX 52,00 52,00
M ota-Engil Srodowisko, Sp zoo ("M ES") Poland 100,00 100,00 Collection of municipal solid - out/09 Through SUM A (Krakow) 100,00 100,00 waste
NOVA BEIRA - Gestão de Resíduos, SA ("NOVA BEIRA") Lisbon 100,00 100,00 Treatment and disposal of - dez/07 Through NOVAFLEX 33,00 33,00 other non-hazardous waste Through INVESTAM BIENTE 67,00 67,00
NOVAFLEX Lisbon 100,00 100,00 Collection of other non- - dez/07 Through SUM A 100,00 100,00 hazardous waste
REAL VERDE - Técnicas de Ambiente, SA ("REAL VERDE") Vila Real 100,00 100,00 Treatment and disposal of - dez/07 Through NOVAFLEX 100,00 100,00 other non-hazardous waste
RESIGÉS - Gestão de Resíduos Hospitalares, Lda ("RESIGÉS") Setúbal 50,00 50,00 Collection of hazardous waste - dez/07 Through NOVAFLEX 50,00 50,00
RESILEI - Tratamento de Resíduos Industriais, SA ("RESILEI") (a) Leiria 50,00 50,00 Collection and treatment of - jun/03 Through SUM A 50,00 50,00 industrial waste
RIM A - Resíduos Industriais e M eio Ambiente, SA ("RIM A") Silvares 96,129 96,129 Collection and treatment of ago/01 - Through SUM A 96,129 96,129 industrial waste
SIGA - Serviço Integrado Gestão Ambiental, SA ("SIGA") São Roque 70,00 70,00 Treatment and disposal of non- out/08 - Through SUM A 70,00 70,00 hazardous waste
SRI - Gestão de Resíduos, Lda ("SRI") Sertã 78,35 78,35 Collection of hazardous waste ago/08 - Through CORREIA & CORREIA 78,35 78,35
SUM A (Douro) - Serviços Urbanos e M eio Ambiente, Lda ("SUM A M urça 100,00 100,00 Collection and treatment of jul/00 - Douro") solid waste Through SUM A 100,00 100,00
SUM A Esposende Esposende 100,00 100,00 Collection and treatment of dez/99 - Through SUM A 100,00 100,00 solid waste
SUM A (M atosinhos) - Serviços Urbanos e M eio Ambiente, SA M atosinhos 100,00 100,00 Collection and treatment of jul/00 - ("SUM AM atosinhos") solid waste Through SUM A 100,00 100,00
SUM A (Porto) - Serviços Urbanos and M eio Ambiente, SA ("SUM A Porto 100,00 100,00 Collection of municipal solid nov/08 - Porto") waste Through SUM A 100,00 100,00
TRIU - Tecnicas de Resíduos Industriais e Urbanos, SA ("TRIU") Prior Velho 78,35 78,35 Collection of non-hazardous - set/08 Through ENVIROIL II 78,35 78,35 waste
SIGAM B Angola 99,90 99,90 Waste collection fev/14 - Through NOVAFLEX (Luanda) 99,90 99,90
SUM A M acau M acao 99,00 99,00 Waste collection dez/13 - Through SUM A 99,00 99,00
ENVIROIL II Torres Novas 70,52 70,52 Recycling of waste oils, abr/11 - Through ENVIROIL 70,52 70,52 production of electricity and sale of fuels
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Percentage Percentage Date of Date of Company name Head office Interest 2019 Interest 2018 M ain activity establishment acquisition
SUM A M oçambique, Lda. ("SUM AM oçambique") M ozambique 99,00 99,00 Home cleaning jun/11 - Through SUM A (M aputo) 99,00 99,00
AGIR - Ambiente e Gestão, Lda ("AGIR") (a) Cape Verde 50,00 50,00 Collection and treatment of dez/07 - Through SUM A 50,00 50,00 solid waste
SUM A Tratamento Lisbon 80,00 80,00 Collection and treatment of out/14 - Through SUM A 79,98 79,98 solid waste Through NOVAFLEX 0,01 0,01 Through SUM A Esposende 0,01 0,01
TRIAZA - Tratamento de Resíduos Industriais de Azambuja, SA ago/15 - Lisbon 100,00 100,00 Construction and operation ("TRIAZA") Through SUM A 100,00 100,00 of the landfill
ECOVISION Oman 51,00 51,00 Collection of waste and jul/15 - Through SUM A 51,00 51,00 urban cleaning
EGF Lisbon 99,99 99,99 Treatment and recovery - jul/15 Through SUM A Tratamento 99,99 99,99 of waste
VALORM INHO Valença 51,00 51,00 Treatment and recovery - jul/15 Through EGF 51,00 51,00 of waste
RESULIM A Vila Fria 51,00 51,00 Treatment and recovery - jul/15 Through EGF 51,00 51,00 of waste
Celorico de - jul/15 RESINORTE 75,11 75,11 Treatment and recovery Bastos Through EGF 75,11 75,11 of waste
Vila Nova de - jul/15 SULDOURO 60,00 60,00 Treatment and recovery Gaia Through EGF 60,00 60,00 of waste
RESIESTRELA Fundão 62,95 62,95 Treatment and recovery - jul/15 Through EGF 62,95 62,95 of waste
ERSUC - ResÍduos Solidos do Centro, SA ("ERSUC") Coimbra 57,44 57,44 Treatment and recovery - jul/15 Through EGF 51,46 51,46 of waste Through SUM A 5,98 5,98
VALORLIS Leiria 51,00 51,00 Treatment and recovery - jul/15 Through EGF 51,00 51,00 of waste
VALNOR Avis 53,33 53,33 Treatment and recovery - jul/15 Through EGF 53,33 53,33 of waste
São João da - jul/15 VALORSUL 52,93 52,93 Treatment and recovery Talha Through EGF 52,93 52,93 of waste
AMARSUL Palmela 51,00 51,00 Treatment and recovery - jul/15 Through EGF 51,00 51,00 of waste
ALGAR Almancil 56,00 56,00 Treatment and recovery - jul/15 Through EGF 56,00 56,00 of waste
SBE Waste M anagement Limited (b) Hong Kong 90,00 90,00 Treatment and recovery abr/16 - Through SUM A 90,00 90,00 of waste
(a) At 31 December 2019 and 2018, this investee was included in the consolidation using the full consolidation method, due to the remaining shareholders having transferred control of the management of RESILEI’s operational and financial policies to SUMA.
(b) This investee was established in April 2016, but did not begin operating. In September 2017, the Company acquired a 30% stake in its capital to establish an interest of 90%, and began including it in the consolidation using the full method.
These subsidiaries were included in the consolidation using the full consolidation method, under which it holds or controls the majority of the voting rights. In addition, the consolidated financial statements include the effect of the full consolidation of the operations of the subsidiaries disposed of and settled until the effective date.
For foreign-based companies, their financial statements were translated into euros using the exchange rates prevailing at the date of the consolidated balance sheet.
Investments in associated companies
At 31 December 2019 and 2018, the group held the following investments in associated companies: Percentage Company name Head office interest Activity AMBIBATALHA - Gestão de Resíduos, SA ("AMBIBATALHA") Batalha 20,00 Collection and treatment of solid waste Santiago do AMBILITAL - Investimentos Ambientais no Alentejo, EIM ("AMBILITAL") 49,00 Collection and treatment of solid waste Cacém CITRUP - Centro Integrado de Resíduos, Lda. ("CITRUP") Maia 30,00 Collection and treatment of solid waste ECOLEZÍRIA - Empresa Intermunicipal para o Tratamento de Almeirim 24,50 Collection and treatment of solid waste Resíduos Sólidos, EIM ("ECOLEZÍRIA") ECOLIFE Maputo 30,00 Collection and treatment of solid waste Geres Participações, SA Belo Horizonte 42,85 Collection and treatment of solid waste VISTA Was te Luanda 49,00 Collection and treatment of solid waste
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Investments in associated companies are recorded under the equity method (Note 3.2). For this purpose, the financial statements of the companies were used with the same reporting date as those of the group. For foreign-based companies, their financial statements were translated into euros using the exchange rates prevailing at the date of the consolidated balance sheet. The results of these companies were translated into euros at the average exchange rate for the years. The difference resulting from the conversion is recorded in equity under “Other changes in equity”.
Investments in other investees
At 31 December 2018, the Company had the following investments in subsidiaries: Percentage Company name Head office interest 2018
Lisgarante - Sociedade de Garantia Mútua, SA ("Lisgarante") Lisbon 0,01% Garval - Sociedade de Garantia Mútua, SA ("Garval") Santarém 0,01%
During the year ended 31 December 2019, Suma sold both holdings.
These holdings are recorded at acquisition cost (Note 3.2).
7. TANGIBLE FIXED ASSETS
During the years ended 31 December 2019 and 2018, the movements in tangible fixed assets, as well as in the related accumulated depreciation and impairment losses, were as follows:
2019 Land and Buildings and Transport Other Tangible natural other Basic Office Tangible Fixed Assets resources structures equipment equipment equipment fixed assets in progress Total
Gross Assets: Opening balance 6 296 433 21 360 737 53 457 438 50 990 256 3 285 820 8 443 229 2 696 381 146 530 294 Acquisitions 188 237 1 292 798 349 8 811 013 87 115 176 370 1 647 850 11 710 226 Disposals - (9 767) (124 331) (2 653 438) (25 572) (543 108) - (3 356 216) Transfers - 372 961 235 605 26 513 77 300 - (735 012) (22 633) Write-offs - (626) (82 759) (717 269) (46 700) (9 830) - (857 184) Reclassifications (2 194) ------(2 194) Currency revaluation 1 020 38 394 148 445 30 281 4 355 - 69 222 564 Closing balance 6 483 496 21 762 991 54 432 747 56 487 356 3 382 318 8 066 661 3 609 288 154 224 857
Depreciation and losses due to impairment losses: Opening balance 705 017 12 298 805 36 682 290 39 409 871 3 094 159 7 810 172 283 362 100 283 676 Depreciation for the year (Note 30) 43 826 1 335 227 2 731 083 3 036 732 161 079 297 292 - 7 605 239 Disposals - (3 836) (71 592) (2 644 638) (25 572) (485 417) - (3 231 055) Transfers ------Write-offs - (530) (82 379) (739 143) (46 189) (9 830) - (878 071) Currency revaluation - 10 253 48 815 11 518 3 874 - - 74 460 Closing balance 748 843 13 639 919 39 308 217 39 074 340 3 187 351 7 612 217 283 362 103 854 249 Net assets 5 734 653 8 123 072 15 124 530 17 413 016 194 967 454 444 3 325 926 50 370 608
2018 Land and Buildings and Transport Other Tangible natural other Basic Office Tangible Fixed Assets resources structures equipment equipment equipment fixed assets in progress Total
Gross Assets: Opening balance 6 165 171 20 731 607 53 155 138 54 884 058 3 201 379 8 758 928 3 272 610 150 168 891 Acquisitions 300 33 528 322 675 3 347 963 55 898 220 060 770 247 4 750 671 Disposals - (39 339) (421 088) (7 789 024) (5 523) (529 037) - (8 784 010) Transfers 133 862 562 549 78 747 481 255 36 418 - (1 292 830) - Write-offs - - (10 336) (2 095) (11 569) (6 722) - (30 721) Reclassifications ------(53 449) (53 449) Currency revaluation (2 901) 72 392 332 301 68 099 9 217 - (196) 478 911 Closing balance 6 296 433 21 360 737 53 457 438 50 990 256 3 285 820 8 443 229 2 696 381 146 530 294
Depreciation and losses due to impairment losses: Opening balance 644 772 10 874 489 34 241 322 42 127 435 2 943 019 8 071 797 283 362 99 186 197 Depreciation for the year (Note 30) 60 245 1 421 413 2 668 564 2 739 319 160 243 274 100 - 7 323 885 Disposals - (15 526) (320 098) (5 479 360) (5 344) (529 037) - (6 349 366) Write-offs - - (9 459) (2 095) (11 569) (6 689) - (29 811) Currency revaluation - 18 429 101 961 24 572 7 809 - - 152 772 Closing balance 705 017 12 298 805 36 682 290 39 409 871 3 094 159 7 810 172 283 362 100 283 676 Net assets 5 591 415 9 061 932 16 775 148 11 580 385 191 662 633 057 2 413 019 46 246 617
During the year ended 31 December 2019 and 2018, the main purchases of tangible fixed assets are related to the acquisition of equipment, transport equipment and containers required for the Group’s operating activities, as well as the improvement and expansion of the facilities of CORREIA & CORREIA and ENVIROIL II.
Transport equipment includes all types of vehicles and equipment used in municipal solid waste collection services, namely, sweeping vehicles and vacuum sweepers, container washers, crane and compactor vehicles and waste collection vehicles, among others. This type of equipment is essentially acquired through financial leasing contracts, as evidenced in Note 22.2.
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94 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
Disposals correspond essentially to the sale of several types of used vehicles that had been mostly depreciated. The write-offs mainly concern containers that were no longer in working order.
8 INVESTMENT PROPERTIES
As of 31 December 2019 and 2018, investment properties include land located in Cascais, Maceira, Escandarão, Várzea, Lousada and Samora Correia. These lands are not used in the production or supply of goods and services. They are recorded at historical cost, in the amounts of 1,647,000 euros, 176,779 euros, 14,863 euros, 35,491 euros, 280,403 euros and 331,829 euros, respectively.
In addition, on 31 December 2019 and 2018, this caption included a unit of a property leased to third parties in Lisbon in an amount of 12,571 euros and 11,161 euros, respectively.
In the years ended 31 December 2019 and 2018, the movement under this caption was as follows:
2019 2018
Opening balance 2 497 526 2 498 630 Reclassifications 2 194 Depreciation for the year (Note 30) (783) (1 104) Closing balance 2 498 937 2 497 526
As of 31 December 2019, investment properties have a market value higher than their book value, amounting to approximately 2,920,233 euros, according to property appraisals carried out by an independent entity, as a result of which no evidence of impairment exists.
9. GOODWILL
The detail of goodwill refers to the purchase difference recorded in previous years, in the acquisition of subsidiaries and investees. As of 31 December 2019 and 2018, the detail of goodwill is as follows:
Entity or cash-generating Acquisitio Amount carried Depreciation of the Amount carried unit n year forward 2018 year (Note 30) forward 2019
STL 2003 290 542 (111 747) 178 795 ECOATLÂNTICA 2006 102 889 (6 559) 96 330 RESILEI 2007 142 848 (21 007) 121 841 TRIU 2008 3 029 920 (280 599) 2 749 321 ENVIROIL 2009 8 017 537 (509 830) 7 507 707 11 583 736 (929 742) 10 653 994
During the years ended 31 December 2019 and 2018, the movement in goodwill was as follows:
2019 2018
Opening balance 11 583 736 12 513 478 Amortisation (929 742) (929 742) Closing balance 10 653 994 11 583 736
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SUMASUMA · Relatório · Consolidated & Contas Annual Consolidadas Accounts 20192019 | | 95 7 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 At 31 de December(Amounts de 2019 expressed (Amounts expressed in euros) in euros)
During the years ended 31 December 2019 and 2018, the company assessed the recoverable value of its financial holdings, considering the cash flow projections in accordance with the financial projections of each cash-generating unit for a period of five years, using a discount rate of between 4.71% in 2019 and 6.27% and 6.65% in 2018 and a perpetuity growth rate of 2%. For the investee Resilei, the same discount rate was used, but no perpetuity growth rate and considering cash flow projections until 2031, given that the landfill has a finite useful life.
The recoverable value of STL was determined based on its current use value, calculated based on projections of cash flows up to the end of the respective contracts with customers and without a perpetuity growth rate.
No evidence of impairment losses was identified for the goodwill.
10. INTANGIBLE ASSETS
During the years ended 31 December 2019 and 2018, the movements in intangible assets, as well as in the respective depreciation and accumulated impairment losses, were as follows: 2018 Intangible Contractual Regulatory Development Computer assets in Other intangible rights assets expenditure programs progress assets Total
Gross Assets: Opening balance 1 042 981 349 270 201 557 533 825 629 9 821 638 5 943 917 1 060 400 268 Acquisitions 38 893 438 - - 14 704 17 061 397 4 438 609 60 408 148 Disposals (3 592 019) - - - - - (3 592 019) Write-offs (10 975 939) - - - - (5 083) (10 981 022) Reclassifications - - - 53 449 - - 53 449 Transfers 14 078 243 - - 26 780 (15 040 890) 35 040 (900 826) Closing balance 1 081 385 072 270 201 557 533 920 562 11 842 146 10 412 484 1 105 387 998
Accumulated depreciation and impairment losses: Opening balance 776 025 851 28 427 279 309 804 478 - 2 404 857 779 542 922 Adjustments (819 352) - - - - - (819 352) Amortizations for the year (Note 30) 33 660 986 14 213 92 382 39 586 - 2 213 184 36 020 351 Disposals (3 570 780) - - - - - (3 570 780) Write-offs (10 121 877) - - - - - (10 121 877) Transfers - - - 64 - - 64 Closing balance 795 174 828 42 640 371 691 844 129 - 4 618 041 801 051 328 Net assets 286 210 244 227 561 185 842 76 433 11 842 146 5 794 443 304 336 670 2019 Intangible Contractual Regulatory Development Computer assets in Other intangible rights assets expenditure programs progress assets Total
Gross Assets: Opening balance 1 081 385 072 270 201 557 533 920 562 11 842 146 10 412 484 1 105 387 998 Acquisitions 42 410 465 - - 7 904 43 784 326 3 605 856 89 808 551 Disposals (3 973 791) - - - - - (3 973 791) Write-offs (14 843 640) - - - - - (14 843 640) Other movements (a) - - - 311 - - 311 Transfers 27 666 618 - - - (27 831 892) - (165 274) Closing balance 1 132 644 725 270 201 557 533 928 777 27 794 580 14 018 340 1 176 214 155
Accumulated depreciation and impairment losses: Opening balance 795 174 828 42 640 371 691 844 129 - 4 618 041 801 051 328 Amortizations for the year (Note 30) 30 564 119 14 213 92 382 38 327 - 2 604 727 33 313 768 Disposals (3 906 426) - - - - - (3 906 426) Write-offs 33 293 - - - - - 33 293 Change in consolidation perimeter (Note 7) (14 595 288) - - 117 - - (14 595 171) Closing balance 807 270 526 56 853 464 073 882 573 - 7 222 768 815 896 792 Net assets 325 374 199 213 348 93 460 46 204 27 794 580 6 795 572 360 317 363
The main investments made during the year ended 31 December 2019 were as follows:
- Algar: Start of construction of the CTTRU Centre for the treatment and sorting of urban waste in Barlaven- to and completion of the construction of Cell D of the Barlavento Landfill. - Amarsul: reinforcement of the ecopoints and glass windows network, construction of ecological islands and respective equipment. - Ersuc: Acquisition of replacement equipment, selective collection vehicles, landfill machines, wheel shov- els and rotary screens, beginning the construction of new cells and sealing. - Resiestrela: Acquisition of various landfill replacement equipment and Selective Collection equipment - Resinorte: acquisition of automatic compactors, waste transportation vehicles, acquisition of reverse os- moses for the Boticas, Celorico and Bigorne installations, acquisition of other equipment. Beginning of the work to expand the Riba de Ave screening. - Resulima; Construction of the Mechanical Treatment of Paradela, the Paradela Screening Centre and var- ious Selective Collection equipment - Suldouro: TMB benefits and acquisition of containers for door-to-door collection. 80
96 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
- Valnor: Acquisition of reverse osmosis for the Wastewater Treatment plant and, Acquisition of various equipment for landfill replacement, as well as selective collection equipment - Valorlis: Acquisition of vehicles for Selective Collection, ecopoints, various equipment to replace Landfill and other equipment. - Valorminho: Acquisition of various landfill replacement equipment, Selective Collection equipment and construction of the pruc unit that will allow the preparation of waste for composting. - Valorsul: increase in the capacity of the Centre's packaging line, optimisation of the plan line at the Lumiar Screening Centre, expansion of the Óbidos and Alenquer Transfer Stations, purchase of cleaning, transpor- tation and collection equipment.
The main investments made during the year ended 31 December 2018 were as follows:
- Region of the Algarve: Continuation of the construction of cell C of the Sotavento Landfill and com- mencement of the construction of cell D of the Barlavento Landfill, acquisition of heavy vehicles for selec- tive collection and transfer. The total investment made during the year amounted to around 12,000,000 eu- ros. -South Bank of the Tagus Region: Conclusion of the construction of the Seixal Organic Recovery Centre, acquisition of vehicles and containers for selective collection, acquisition of ecopoints and acquisition of various items of mechanical equipment. Total investment during the year amounted to around 7,000,000 euros. - Central Region: Acquisition of waste transportation vehicles, landfill equipment, investment in landfills and biogas and acquisition of automatic feeders for mechanical treatment and sorting. Total investment during the year amounted to around 9,000,000 euros. - Vale do Lima and Baixo Cávado Region: Acquisition of ecopoints, vehicle equipment for selective collec- tion and partial closure of the Vila Fria landfill. Total investment during the year amounted to 3,500,000 eu- ros. - North Central Region: Acquisition of ecopoints, selective collection vehicles and permanent sealing of the Gonça landfill. Total investment during the year amounted to around 5,000,000 euros. -Lisbon and West Regions: Acquisition of waste transportation vehicles, containers, replacement of landfill equipment and optimisation of the packaging line at the Lumiar Sorting Centre. Total investment during the year amounted to around 9,000,000 euros.
For the purpose of assessing the existence of signs of impairment in intangible assets, indicators such as changes in interest rates and capital remuneration rates defined by the regulator (ERSAR) were considered, as well as an analysis of cash flow generation taking into account real and forward-looking accounts based on the regulated accounts approved by said regulator.
As of 31 December 2019, based on the impairment testing carried out, no impairment losses were recorded in the aforementioned intangible assets.
With regard to the EGF group, we emphasise that ERSAR's decisions on the permitted income and regulated tariffs for the 2019-2021 regulatory period of the subsidiary EGF group were the subject of a special administrative action, with a request for challenge in court by the respective subsidiary.
Given the current uncertainties regarding the outcome of this litigation and the regulatory framework associated with the potential impact on the development of the future operating and financial activity of the subsidiary EGF Group, we note that this situation may also have a possible impact on the assumptions of the impairment test on the respective assets in the following years and, consequently, in the valuation of the group's intangible assets.
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SUMA · Consolidated Annual Accounts 2019 | 97 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 At 31 de December(Amounts de 2019 expressed (Amounts expressed in euros) in euros)
11. FINANCIAL INTERESTS
As of 31 December 2019 and 2018, the group held the following financial holdings in associated companies:
2019
% Equity Net Value of the Additional paid- Total equity Head office held Assets capital Revenue income holding in capital investment Investments in associated companies: VISTA Waste (a) and (b) Luanda 49,00% 150 863 560 59 895 977 63 198 314 27 376 093 29 349 029 944 834 30 293 863 Santiago AMBILITAL do Cacém 49,00% 15 346 723 12 270 260 4 075 037 304 638 6 012 427 - 6 012 427 CITRUP Maia 30,00% 163 433 96 101 392 707 74 958 28 830 - 28 830 ECOLEZÍRIA (c) Almeirim 24,50% - - - - 317 481 - 317 481 AMBIBATALHA Batalha 20,00% 253 340 201 154 - (739) 40 231 - 40 231 ECOLIFE (b) Maputo 30,00% 2 541 091 708 517 2 393 345 72 383 212 555 - 212 555 ECB SUMA (b) Belo Horizonte 42,85% 16 841 313 4 784 611 - (584 720) 2 050 206 2 050 206 186 009 460 77 956 620 70 059 403 27 242 613 38 010 759 944 834 38 955 593 2018
% Equity Net Value of the Additional paid- Total equity Head office held Assets capital Revenue income holding in capital investment Investments in associated companies: VISTA Waste (a) and (b) Luanda 49,00% 122 615 025 48 557 130 60 000 991 23 876 749 23 792 994 944 834 24 737 828 Santiago AMBILITAL do Cacém 49,00% 9 991 577 11 909 385 3 858 469 280 607 5 835 599 - 5 835 599 CITRUP Maia 30,00% 195 969 59 081 593 549 37 938 17 724 - 17 724 ECOLEZÍRIA (c) Almeirim 24,50% - - - - 317 481 - 317 481 AMBIBATALHA Batalha 20,00% 253 846 201 893 - (697) 40 379 - 40 379 ECOLIFE (b) Maputo 30,00% 1 706 174 621 428 2 707 014 189 719 186 428 - 186 428 ECB SUMA (b) Belo Horizonte 42,85% 10 996 836 5 455 961 - (9 139) 2 337 879 - 2 337 879 145 759 427 66 804 879 67 160 022 24 375 177 32 528 484 944 834 33 473 318
(a) The company’s equity includes additional paid-in capital or supplementary capital granted by the company.
(b) These companies are based outside Portugal and use a currency other than the euro. Their financial statements are translated into euros and transposed to the NCRF. The subsidiary ECB SUMA changed its name to Geres Participações SA.
(c) Financial information not available.
During the years ended 31 December 2019 and 2018, the group did not identify any signs of impairment in relation to the financial holdings held.
Investments in associated companies are recorded under the equity method (Note 3.2). For this purpose, the financial statements of the companies were used with the same reporting date as those of the group.
At 31 December 2018, the group held the following investments in other investees:
2018
% Equity Net Value of the Head office held Assets capital Revenue income holding
Lisgarante - Sociedade de Garantia Mútua, SA ("Lisgarante") Lisbon 0,01% (a) (a) (a) (a) 3 750 Garval - Sociedade de Garantia Mútua, SA ("Garval") Santarém 0,01% (a) (a) (a) (a) 3 750 - - - - 7 500
(a) Financial information not available.
In the year ended 31 December 2019, the company sold both interests at acquisition cost.
These interests are recorded at acquisition cost (Note 3.2).
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98 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
During the year ended 31 December 2019 and 2018, the movement in “Financial investments” was as follows: 2019
Holdings in associated companies
Value of Additional paid- Other holding in capital Total holdings
Opening balance 32 528 484 944 834 33 473 318 7 500 Decreases - - - (7 500) Dividends assigned (134 274) - (134 274) - Equity method 5 616 548 - 5 616 548 - Closing balance 38 010 759 944 834 38 955 593 - 2018
Holdings in associated companies
Value of Additional paid- Other holding in capital Total holdings
Opening balance 35 833 022 944 834 36 777 856 12 937 Decreases - - - (5 437) Dividends assigned (143 735) - (143 735) - Equity method (3 160 802) - (3 160 802) - Closing balance 32 528 484 944 834 33 473 318 7 500
During the year ended 31 December 2019 and 2018, of the dividends allocated, 134,274 euros and 1,064,053 euros, respectively, were received and the differences from the amounts approved for distribution were recorded in accounts receivable of the respective subsidiaries. Movements relating to the application of the equity method are as follows: 2019 Gains/(losses) Other variations allocated to in equity Investments associated companies capital financial
VISTA Was te 14 891 053,75 (9 335 018,72) 5 556 035 AMBILITAL 149 272 150 448 299 721 CITRUP 22 487 - 22 487 AMBIBATALHA (148) - (148) ECOLIFE 21 715 4 412 26 127 ECB SUMA (256 105) (31 569) (287 673) 14 828 276 (9 211 728) 5 616 548
2018 Gains/(losses) Other variations allocated to in equity Investments associated companies capital financial
VISTA Was te 11 699 607 (14 536 219) (2 836 613) AMBILITAL 137 498 (249 811) (112 313) CITRUP 11 381 - 11 381 AMBIBATALHA (139) - (139) ECOLIFE 56 916 1 455 58 371 ECB SUMA (3 916) (277 573) (281 489) 11 901 346 (15 062 148) (3 160 802)
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SUMA · Consolidated Annual Accounts 2019 | 99 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 At 31 de December(Amounts de 2019 expressed (Amounts expressed in euros) in euros)
The caption “Other changes in equity” corresponds essentially to the recording of the exchange rate effect of the application of the equity method of associated companies in foreign currency and to the recording of Government grants they received. Additionally, in 2018 following the classification of Angola as an economy with hyperinflation, the financial statements of the associate VISTA WASTE were adjusted accordingly, the respective impacts being recorded under the caption “Other changes in equity”.
In the year ended 31 December 2019, an adjustment was made in the amount of 110,741 euros related to the difference in results of the subsidiaries ECOVISION and INVESTAMBIENTE.
12. LIABILITIES FOR POST-EMPLOYMENT BENEFITS
The EGF subgroup has a “defined-benefit” pension plan for its former employees, financed through payments to independently managed funds, to cover the payment of pension supplements (old age or disability) in the part that exceeds that guaranteed by social security.
A defined-benefit plan is a pension plan that defines the amount of pension benefit that an employee will receive in retirement, usually dependent on one or more factors such as age, years of service and compensation.
The defined-benefit plan obligation is calculated annually by independent actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by the discount of the future payment of the benefits using the interest rate of high quality bonds denominated in the same currency in which the benefits will be paid and with terms of maturity that approximate those of the liability assumed. Since 1 January 2007, EGF has changed the defined-benefit pension fund to a defined contribution pension fund for current employees.
This plan is based on a contribution from EGF calculated as a percentage of the pensionable salary of each employee, provided that the latter meets the conditions necessary to be eligible under the Plan.
Under this defined contribution plan, the cost of the pension plan is fixed from the outset and remains stable, with no need to make periodic actuarial valuations or meet financing deficits.
For the former employees’ plan, the actuarial study carried out, with reference to 31 December 2019 and 2018, presented the following assumptions: 2019 2018
Mortality table TV 88/90 TV 88/90 Disability table EKV 79 EKV 79 Annual discount rate 4,50% 3,10%
At 31 December 2019 and 2018, the retirement benefit liabilities are as follows:
2019 2018
Liabilities at the beginning of the year 280 668 325 035 Interest cost 7 713 8 139 Actuarial Losses/(Gains) resulting from changes in assumptions 82 669 16 222 Benefits paid (63 748) (68 728) Discount rate change 9 282 - Liabilities at the end of the year 316 583 280 668
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100 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
For the year ended 31 December 2019 and 2018, the evolution of the assets of the fund and the summary of the fund was as follows: 2019 2018
Value of assets at the beginning of the year 280 668 342 506 Effective return 7 702 8 449 Gain/(loss) of income 3 624 (19 497) Company Contributions 62 800 19 745 Benefits paid (95 657) (70 535) Value of assets at end of year 259 136 280 668 2019 2018
Current value of past liabilities 316 583 280 668 Current value of the assets in the fund 259 136 280 668 (Deficit)/Surplus in the fund (57 447) -
13. INCOME TAX
The Company and its subsidiaries resident in Portugal are subject to Corporation Tax (“IRC”) at a standard rate of 21% on the basic taxable amount, plus a surcharge of 1.5% on taxable income, resulting in an aggregate tax rate of, at the most, 22.5%.
Additionally, taxable profits for the year exceeding 1,500,000 euros are subject to a state surcharge, pursuant to article 87-A of the Corporation Tax Code, at the following rates:
- 3% for taxable income between 1,500,000 euros and 7,500,000 euros; - 5% for taxable income between 7,500,000 euros and 35,000,000 euros; and - 9% for taxable income greater than 35,000,000 euros.
The deduction of net financing costs in determining taxable profit was subject to the higher of the following limits:
1,000,000 euros; 30% of income before depreciation, net financing costs and taxes.
Under Article 88 of the Corporation Tax Code, the company is subject to autonomous taxation on a set of charges at the rates provided for in the above article.
In accordance with current legislation, tax returns are subject to review and correction by the tax authorities for a period of four years (five years for Social Security), except where there are tax losses, tax exemptions or reductions have been granted, or inspections, complaints or disputes are in progress, in which case, depending on the circumstances, the time limits may be extended or suspended. Therefore, the Group's tax returns for the years 2016 to 2019 may still be subject to revision.
The Board of Directors believes that any corrections resulting from reviews/inspections by the tax authorities of those tax returns will not have a significant effect on the financial statements as at 31 December 2019 and 2018.
Under current law, losses are carried forward for a period of 5 years (12 years for those incurred in 2014 and 2016) after their occurrence and deductible from taxable income generated during that period, limited to the amount of the deduction in each year, which may not exceed 70% of the respective taxable profit, also applicable to tax losses generated in previous years.
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SUMA · Consolidated Annual Accounts 2019 | 101 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 At 31 de December(Amounts de 2019 expressed (Amounts expressed in euros) in euros)
As of 31 December 2019, the group had tax losses carried forward in various companies based in Portugal, as follows: 2019 Year in which Deadline they were for generated Amount use
2014 353 311 2026 2015 1 409 412 2027 2016 28 771 968 2028 2017 3 700 975 2022 2018 14 654 136 2023 2019 19 505 236 2024 68 395 040
Additionally, on 31 December 2019 and 2018, the group had tax losses carried forward from companies located outside Portuguese territory, in the amount of 769,202 euros and 768,769 euros, respectively.
As of 31 December 2019, only deferred tax assets were recognised up to the amount of tax losses that Management expects to be recoverable.
a) Movements in deferred taxes:
At 31 December 2019 and 2018, according to the temporary differences that generated them, deferred tax assets and liabilities were as follows: Deferred tax assets Deferred tax liabilities 2019 2018 2019 2018
Provisions for other risks and charges 543 091 398 541 5 071 395 5 813 372 Financial restatement of accounts receivable 105 650 130 462 - - Tangible fixed assets 33 430 33 430 695 919 581 634 Impairment losses on inventories 74 852 74 852 - - Impairment losses on trade accounts receivable 207 814 201 182 - - Investment subsidies - - 7 731 310 7 997 796 Grants recognised in advance - - 2 681 837 Tax loss carryforwards 9 136 198 10 703 444 - - Regulatory liabilities 4 061 570 5 852 295 - - Transition adjustment - (POC/IFRS) (a) - - 20 188 027 21 563 175 Transition adjustment - subsidies 1 341 592 1 447 098 - - Intangible assets 17 984 651 20 772 296 9 790 601 10 443 307 Accruals of contractual expenses - - - - Tariff deviation - - 144 382 947 311 Deferral of margins generated internally 51 882 79 524 - - Other 3 001 740 2 375 526 - - Regulatory balance 1 086 085 - - - 37 628 555 42 068 652 46 303 471 47 346 595
(a) These temporary differences result from the transitional adjustments determined in 2009, by the Concessionaires, as a result of the change from the POC to the IFRS. These differences are mainly due to increases in expenses for contractual investments made and amortisations relating to investments made, as well as the recognition of the respective grants, which, in view of the applicable legal provisions, will be recognised, for tax purposes, during the remaining period of the concession contract or in 5 years, depending on whether they relate to future or past investments, respectively. The remaining temporary differences result mainly from the recording of accruals of amortisations for future contractual investment and the registration of grants.
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102 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
The movement in deferred tax assets and liabilities for the years ended 31 December 2019 and 2018 was as follows: 2019
Opening Income balance statement Equity Closing balance Deferred tax assets Provisions for risks and charges 398 541 144 550 - 543 091 Financial restatement of accounts receivable 130 462 (24 811) - 105 650 Tangible fixed assets 33 430 - - 33 430 Impairment losses on inventories 74 852 - - 74 852 Impairment losses on trade accounts receivable 201 182 6 632 - 207 814 Tax loss carryforwards 10 703 445 (1 567 247) - 9 136 198 Regulatory liabilities 5 852 295 (1 790 725) - 4 061 570 Transition adjustments - Subsidies 1 447 098 (105 506) - 1 341 592 Intangible assets 20 772 296 (2 787 645) - 17 984 651 Deferral of margins generated internally 79 523 (27 642) - 51 882 Other 2 375 528 626 212 - 3 001 740 Regulatory balance - 1 086 085 - 1 086 085 42 068 652 (4 440 097) - 37 628 555 Deferred tax liabilities Transition adjustment - (POC/IFRS) (a) 21 563 174 (1 375 148) - 20 188 027 Tangible fixed assets 581 633 117 365 (3 080) 695 919 Investment subsidies 4 824 738 - 2 906 572 7 731 310 Grants recognised in advance 3 173 058 (491 221) 2 681 837 Accrued liability 5 813 373 (741 978) - 5 071 395 Tariff deviation 947 311 (802 927) - 144 384 Fair value of intangible assets 10 443 307 (652 706) - 9 790 601 47 346 595 (3 946 614) 2 903 492 46 303 472
2018
Opening Income Closing balance statement Other Equity balance Deferred tax assets Provisions for risks and charges 583 747 (185 205) - - 398 541 Financial restatement of accounts receivable 132 502 (2 044) - 4 130 462 Tangible fixed assets 33 430 - - - 33 430 Impairment losses on inventories 74 852 - - - 74 852 Impairment losses on trade accounts receivable 644 353 (443 171) - - 201 182 Tax loss carryforwards 4 067 514 6 635 930 - - 10 703 444 Regulatory liabilities 6 372 058 (519 763) - - 5 852 295 Transition adjustments - Subsidies 1 535 172 (88 074) - - 1 447 098 Intangible assets 30 565 901 (9 793 605) - - 20 772 296 Deferral of margins generated internally - 79 524 - 79 524 Other 1 966 544 408 982 - - 2 375 526
45 976 073 (3 907 425) - 4 42 068 652 Deferred tax liabilities Transition adjustment - (POC/IFRS) 22 935 713 (1 372 538) - 21 563 175 Tangible fixed assets 522 572 62 379 (3 317) 581 633 Investment subsidies 4 652 619 (438 010) 3 783 187 7 997 796 Provisions for other risks and charges 13 391 630 (7 578 258) - 5 813 372 Tariff deviation 1 199 135 (251 824) - 947 311 Fair value of intangible assets 11 092 532 (649 225) - 10 443 307 53 794 201 (10 227 477) - 3 779 870 47 346 594
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SUMA · Consolidated Annual Accounts 2019 | 103 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 At 31 de December(Amounts de 2019 expressed (Amounts expressed in euros) in euros)
In December 2017, the answer to the request for binding information submitted to the Tax Administra- tion by the EGF as a representative of the concessionaires was obtained, related to the tax deduction of the derecognition of assets not related to the BAR, which resulted in the correction of the tax loss car- ryforwards for the year of 2016, passing a substantial part of the derecognised assets following the change in the regulatory model, to be recovered in the future through its tax amortisation.
As of 31 December 2019 and 2018, the temporary differences denominated “Transitional adjustments” result from the transitional adjustments determined, in 2009, as a result of the change from the POC to the IFRS (with the Group later adopting the SNC). These differences are mainly due to increases in ex- penses for contractual investments made and amortisations relating to investments made, as well as the recognition of the respective grants, which, in view of the applicable legal provisions, will be recog- nised, for tax purposes, during the remaining periods concession contracts.
The remaining temporary differences derive mainly from the recording of accruals of amortisations for future contractual investment (in accordance with the regulatory model in force until 31 December 2015) and the registration of investment grants under equity.
b) Reconciliation of tax rate:
2019 2018
Earnings before taxes 2 242 821 14 303 908 Statutory tax rate 22,50% 22,50% Expected taxation 504 635 3 218 379 Permanent differences (i) 1 019 613 (2 811 633) Temporary difference (32 720) - Non-recoverable special payments on account - - Impacts resulting from PIV 662 090 (4 776 225) Constitution / (use) of tax loss carryforwards 90 064 269 470 State surcharges (17 603) Autonomous taxation (ii) 538 276 860 310 Additional tax settlement 3 379 784 - (Excess)/deficit of tax estimate (806 508) (808 187) 5 337 632 (4 047 887)
Current tax (Note 16) 2 846 363 3 080 352 (Excess)/deficit of tax estimate (806 508) (808 187) Non-recoverable special payment on account 2 - Additional tax settlement (a) 3 379 784 - Deferred tax generated in the year (82 009) (6 320 052) 5 337 632 (4 047 887)
Effective tax rate (a) 238% -
(a) At 31 December 2019, adjustments were made by the Company related to the derecognition of deferred tax assets referring to non-recoverable tax losses in the affiliates held by EGF, tax litigation in AMARSUL and restatement of accounts made in VALORLIS, this restatement of the investee VALORLIS was reflected in the consolidated results for the year, as it is considered immaterial in the context of this consolidated.
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104 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
(i) As of 31 December 2019 and 2018, this caption was broken down as follows: 2019 2018
Undocumented expenses and other charges 253 044 621 163 Non-deductible provisions 378 284 - Capital gains with/without intention to reinvest 59 529 271 061 Corrections relating to previous years 296 276 234 478 Fines and other penalties 180 242 11 571 Impairment/Amortisation of Goodwill 956 936 - Accounting gains (251 294) (137 185) (Gains)/ losses allocated to associated companies (Note 11) (9 293 510) (17 735 417) Net employment creation (968 638) (1 130 088) Depreciation not accepted as expense 56 531 35 929 Other net 12 864 220 5 332 343 4 531 618 (12 496 145) Statutory tax rate 22,50% 22,50% Permanent differences 1 019 614 (2 811 633)
(ii) This sum consists of the portion of Corporation Tax taxed autonomously.
14. INVENTORIES AND COST OF GOODS SOLD AND MATERIALS CONSUMED
As of 31 December 2019 and 2018, the inventories have the following composition: 2019 2018 Gross Impairment Net Gross Impairment Net value losses value value losses value
Goods 11 080 - 11 080 331 - 331 Finished products 1 766 975 - 1 766 975 1 701 038 - 1 701 038 Raw materials and consumables 2 210 359 (293 538) 1 916 821 1 956 717 (293 538) 1 663 179 3 988 414 (293 538) 3 694 876 3 658 085 (293 538) 3 364 548
The cost of goods sold and materials consumed recognised in the years ended 31 December 2019 and 2018, may be broken down as follows: 2019 2018 Raw materials Raw materials and and Goods consumables Total Goods consumables Total
Opening balance 331 1 956 715 1 957 046 239 1 821 851 1 822 090 Purchases 7 835 066 12 688 430 20 523 496 7 371 269 12 207 566 19 578 835 Adjustments (261) 5 457 5 196 (110) 11 377 11 267 Closing balance (5 726) (2 215 713) (2 221 439) (331) (1 956 715) (1 957 046) 7 829 410 12 434 889 20 264 299 7 371 067 12 084 079 19 455 146
In the years ended 31 December 2019 and 2018, the cost of goods sold and materials consumed with related parties amounted to 7,330,113 euros and 6,859,824 euros, respectively (Note 24). This cost relating to merchandise is due to the collection of recyclable waste subcontracted to Lisbon Municipal Council, for an amount of 75% of the value obtained by the Group through the sale of that waste to the companies Sociedade Ponto Verde and Novo Verde.
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SUMA · Consolidated Annual Accounts 2019 | 105 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 At 31 de December(Amounts de 2019 expressed (Amounts expressed in euros) in euros)
The variation in production inventories for the years ended 31 December 2019 and 2018 had the following composition: 2019 2018
Opening balance (1 701 038) (1 445 402) Inventory adjustments 12 637 1 525 Closing balance 1 766 975 1 701 038 Variation of production inventories 78 574 257 161
Impairment losses:
As of 31 December 2019 and 2018, there were no movements in impairment losses on inventories, with the accumulated amount standing at 293,538 euros.
15. TRADE ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
As of 31 December 2019 and 2018, the captions “Trade accounts receivable” and “Other receivables” had the following composition: 2019 Financial restatement of Accumulated trade accounts Reportable Gross value impairment receivable income Net value
Trade accounts receivable, non-current: Related parties (Note 24) 1 163 068 (61 570) - - 1 101 498
Other receivables, non-current: Deferral of tariff (a) (Note 24) 5 399 694 - - - 5 399 694 Other debtors - - Other debtors - Related parties (Note 24) 1 790 579 - - - 1 790 579 7 190 273 - - - 7 190 273 8 353 341 (61 570) - - 8 291 771
Customers, current account: General 47 067 121 (11 215 105) (413 002) (4 221 520) 31 217 494 Related parties (Note 24) 31 822 714 (184 582) - - 31 638 132 78 889 835 (11 399 687) (413 002) (4 221 520) 62 855 626
Other receivables, current account: Other general debtors: 6 025 957 - - (1 451 219) 4 574 738 Other general debtors - Related parties (Note 24) 2 585 333 - - - 2 585 333 Grants receivable 7 218 193 - - - 7 218 193 Advances arising from the assignment of receivables 104 307 - - - 104 307 Investment payments on account 130 816 - - - 130 816 Deferral of tariff (a) (Note 24) 37 260 - - - 37 260 Accrued receivables - Related parties (Note 24) 10 951 - - - 10 951 Debtors by accrued income - Others 5 823 381 - - - 5 823 381 21 936 198 - - (1 451 219) 20 484 979 109 179 374 (11 461 257) (413 002) (5 672 739) 91 632 376
(a) This amount is due to the difference in the value of the tariff by approved by ERSAR, compared to the value invoiced in 2016. In June 2017, it was accepted by ERSAR the proposal made by VALNOR with the agreement of the municipalities, to recover the tariff increase of the first regulatory period until 2024, hence it was part of the balance classified as non-current. In April 2019, ERSAR agreed to extend the tariff agreement until 2027, or rather, it accepted that the regulatory balance created by the agreement shall be settled by the mentioned date. In 2018, the amount of 437,556 euros was used, having been reinforced during the year of 2019 in the amount of 956,210 euros.
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106 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
2018 Financial restatement of Accumulated trade accounts Reportable Gross value impairment receivable income Net value
Trade accounts receivable, non-current: General 1 729 007 (74 664) - - 1 654 343
Other receivables, non-current: Deferral of tariff (a) (Note 24) 4 262 775 - - - 4 262 775 Other debtors 39 138 39 138 Other debtors - Related parties (Note 24) 185 168 - - - 185 168 4 487 081 - - - 4 487 081 6 216 088 (74 664) - - 6 141 424
Customers, current account: General 43 279 492 (11 368 475) (515 069) (4 294 472) 27 101 476 Related parties (Note 24) 33 268 983 - - - 33 268 983 76 548 475 (11 368 475) (515 069) (4 294 472) 60 370 459
Other receivables, current account: Other general debtors: 6 421 671 - - (1 451 219) 4 970 452 Other general debtors - Related parties (Note 24) 726 160 - - - 726 160 Grants receivable 8 056 153 - - - 8 056 153 Advances arising from the assignment of receivables 75 807 - - - 75 807 Investment payments on account 68 057 - - - 68 057 Deferral of tariff (a) (Note 24) 174 789 - - - 174 789 Accrued receivables - Related parties (Note 24) 131 487 - - - 131 487 Debtors by accrued income - Others 2 709 372 - - - 2 709 372 18 363 497 - - (1 451 219) 16 912 279 101 128 061 (11 443 139) (515 069) (5 745 691) 83 424 162
“Grants receivable” refers essentially to PO-SEUR applications approved during 2019 and 2018, under which the EGF Subgroup recognised the amount of 14,800,190 euros and 16,592,438 euros respectively, related to the investment made during the 2018 and 2019 financial years (Note 19).
During the years ended 31 December 2019 and 2018, impairment losses on receivables changed as follows: 2019 2018
Opening balance 11 443 139 11 213 761 Increases 543 740 632 139 Reversals (233 619) (354 778) Uses (107 187) (47 983) Closing balance 11 646 073 11 443 139
As of 31 December 2019 and 2018, an impairment loss in an approximate amount of 6,000,000 euros was reported relating to the value of the financial contribution due by the company Ponto Verde - Sociedade Gestora de Resíduos de Embalagens, SA ("SPV"), due to the increase in costs incurred with the collection and sorting of certain waste delivered by the group for recycling, as that entity does not acknowledge its position as debtor. In the opinion of the group, there are legal and/or constructive responsibilities assumed by that entity, both with the Group and with the public bodies responsible for the Environment, which bind the SPV in the payment of those amounts, which is why the concessionaires, on 14 June 2017 filed a con- solidated consortium litigation in order to collect those amounts. However, in view of the non-recognition of the debt part of the SPV and because the collection of those amounts is not certain, the Group decided to constitute an impairment loss to meet those amounts.
During the years ended 31 December 2019 and 2018, the following movements were made in the balances of the caption financial restatement of trade accounts receivable: 2019 2018
Opening balance 515 069 523 280 Reversal (Note 28) (102 067) (8 212) Closing balance 413 002 515 069
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SUMA · Consolidated Annual Accounts 2019 | 107 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 At 31 de December(Amounts de 2019 expressed (Amounts expressed in euros) in euros)
During the years ended 31 December 2019 and 2018, the following movements were made in the balances of income receivable from trade accounts receivable and other accounts receivable:
2019 2018
Opening balance 5 745 691 9 295 861 Increases/(decreases) (41 839) (3 327 510) Recognition in income (Note 28) (31 112) (222 661)
Closing balance 5 672 739 5 745 691
The income receivable corresponds to interest on arrears charged to customers for delays in the settlement of amounts previously invoiced for services rendered and for services carried out. These amounts are recognised in the statement of income at the time they are paid by the customers (Note 3.18). Additionally, this caption also includes the recognition of services deferred up to that point.
16. STATE AND OTHER PUBLIC BODIES
As of 31 December 2019 and 2018, the caption “State and other public bodies” had the following composition:
2019 2018 Balances Credit Debit Credit balances balances balances balances
IRC: Payments on account - (1 083 259) 3 078 089 - Special payment on account - (52 604) 24 395 - Estimated tax (Note 13) - 2 846 363 (3 080 352) - Withholding - (451 078) 441 642 - Other - (480 875) 1 738 646 - Personal Income Tax - 768 971 - 640 551 Value Added Tax (“VAT”) 9 391 426 - 8 032 246 - VAT – refunds requested 277 678 - 295 867 - Social Security contributions - 1 552 821 - 1 528 401 Waste Management Fee - 22 757 553 - 20 124 212 Other taxes (a) 275 735 85 344 158 723 89 087 9 944 839 25 943 236 10 689 257 22 382 250
a) Includes the waste management fee that corresponds to amounts invoiced to customers of the companies of the EGF subgroup, which will be returned to the Portuguese Environment Agency (“APA”).
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108 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
17. DEFERRED ASSETS AND LIABILITIES
As of 31 December 2019 and 2018, “Deferred” assets and liabilities have the following composition:
2019 2018 Nature Assets Liabilities Assets Liabilities
Non-current:
2018 tariff deviation - 3 491 561 - 9 872 317 2019 tariff deviation - 5 106 202 - - Other - (113 281) - - 8 484 482 - 9 872 317
Current:
Rent, leasing and supplies and external services - - 972 081 - Tariffs - new tariff regulations (a) - 370 134 - 2 477 475 2018 tariff deviation - 4 397 380 - - 2016 tariff deviation - - 955 737 - 2017 tariff deviation - - 2 295 472 - Insurance policies paid in advance 2 457 238 262 225 1 560 932 6 271 Other 2 659 883 634 892 1 363 420 993 028 5 117 121 5 664 631 7 147 641 3 476 774
(a) This amount concerns the difference between the value of the tariff decided by ERSAR and the amount of the tariff billed in 2016, with the agreement of the Municipalities in VALORSUL.
The amounts related to the tariff deviation are derived from the difference between the tariff determined by ERSAR against the amounts of allowable income recalculated based on actual amounts and revenues billed.
18. CAPITAL
At 31 December 2019 and 2018, the capital was composed of two hundred and fifty thousand fully paid-up shares (Note 34) with a par value of fifty euros each. The subscribed capital is held by:
Companies % Amount
Mota-Engil Ambiente e Serviços, SGPS, SA ("MEAS") 61,5% 7 687 500 Urbaser (entity based in Spain and member of the ACS Group) 38,5% 4 812 500 12 500 000 19. OTHER EQUITY CAPTIONS
The relevant information regarding the equity captions, as of 31 December 2019 and 2018, is as follows:
Share premiums: The amount recorded under this caption results from the goodwill obtained in the capital increase made in the year ended 31 December 2004. In accordance with prevailing law, the use of the amount included under this caption follows the legal reserve regime, i.e. it may not be distributed to shareholders, it may be used to absorb losses after all other reserves have been exhausted or it may be incorporated into capital.
Legal reserve: In accordance with prevailing legislation, at least 5% of the annual net profit, if positive, must be appropriated to the legal reserve, until it represents at least 20% of share capital. This reserve cannot be distributed, except in the event of the liquidation of the Company, but may be used to absorb losses, after all the other reserves have been exhausted, or incorporated into capital. Other reserves: These reserves are constituted as free reserves, available for distribution.
Other changes in equity: This caption corresponds to the effect of currency translation adjustments arising from the application of the equity method of associated companies held in foreign currency,
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SUMA · Consolidated Annual Accounts 2019 | 109 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 At 31 de December(Amounts de 2019 expressed (Amounts expressed in euros) in euros)
the effects on associates of the recording of Government grants, the translation of assets and liabilities held in foreign currency, adjustments of the conversion of financial statements prepared in accordance with the POC to the SNC, essentially, the effect of the recognition of trade accounts receivable at amortised cost, using the effective interest rate method, which is called “financial restatement of accounts receivable”. It may be broken down as follows:
2019 2018
Opening balance 12 512 445 (837 238) Equity accounting (Note 11) (9 211 728) (15 062 148) Net deferred tax subsidies (a) 3 868 751 7 612 297 Reclassification of undistributed profits (1 355 857) 24 134 718 Other variations (1 886 168) (3 335 185) Closing balance 3 927 443 12 512 445
(a) Government grants
As of 31 December 2019 and 2018, investment grants obtained by the Group were recorded in equity and may be broken down as follows: 2019 Opening Closing balance Formation Recognition Reclassification balance
TRIU 9 967 - (12 577) 5 896 3 286 CORREIA & CORREIA 73 976 - (12 096) 5 463 67 344 ENVIROIL II 448 771 - (36 860) 16 587 428 498 EGF 20 176 327 14 800 190 (1 108 169) - 33 868 348 20 709 041 14 800 190 (1 169 702) 27 946 34 367 476
2018 Opening balance Formation Recognition Closing balance
TRIU 23 595 - (13 628) 9 967 CORREIA & CORREIA 86 162 - (12 186) 73 976 ENVIROIL II 485 631 - (36 860) 448 771 EGF 3 831 794 16 592 438 (247 905) 20 176 327 4 427 182 16 592 438 (310 579) 20 709 041
2019 2018
Grants 13 630 488 16 281 859 Deferred Tax Liabilities (Note 13) (2 906 572) (3 779 870) 10 723 916 12 501 989
Company shareholders 3 868 751 7 612 297 Non-controlling interests 6 855 166 4 889 692 10 723 916 12 501 989
Appropriation of profits from 2018: By decision of the General Meeting held on 31 April 2019, it was decided that the appropriation of net income for the year ended 31 December 2018 should be directed to unappropriated retained earnings.
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110 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
Additionally, the appropriation of net income for the year includes the distribution of 240,000 euros to company employees.
Appropriation of profits from 2017: By decision of the General Meeting held on 30 April 2018, it was decided that the appropriation of net income for the year ended 31 December 2017 should be directed to unappropriated retained earnings.
Additionally, the appropriation of net income for the year includes the distribution of 240,000 euros to company employees.
20. NON-CONTROLLING INTERESTS
At 31 December 2019 and 2018, the caption non-controlling interests has the following composition:
Balance sheet Income statement 2019 2018 2019 2018
AGIR (8 187) 33 506 (41 693) (4 790) ENVIROIL 4 042 076 4 441 220 502 999 647 699 Subsidiaries of NOVAFLEX 134 046 154 989 2 452 199 871 RESILEI 1 553 994 1 350 518 473 994 270 518 RIMA 110 823 97 151 39 710 27 408 SIGA 31 089 26 483 13 744 3 291 SUMA Macau (10 564) (10 502) 202 (56) ECOVISION (1 278 997) (1 371 413) 203 841 510 613 SBE 2 754 2 875 (195) (588) SUMA Tratamento (2 374 523) 155 752 (3 506 244) (692 370) Subsidiaries of SUMA Tratamento 59 955 862 66 490 156 (8 208 874) 3 719 544 62 158 374 71 370 735 (10 520 064) 4 681 140
Changes in minority interests in the years ended 31 December 2019 and 2018 were as follows: 2019 2018
Opening balance 71 370 735 65 976 903 Income for the year (10 520 064) 4 681 140 Other changes: Allocation of dividends (4 187 853) (7 428 669) Grants 5 303 090 4 889 692 Other 192 466 3 251 669 1 307 703 712 692 (9 212 361) 5 393 832 Closing balance 62 158 374 71 370 735
During the years ended 31 December 2019 and 2018, dividends were paid to non-controlling interests in the amounts of 4,187,853 euros and 7,428,669 euros, respectively.
21. ACCRUED LIABILITIES
The changes in accrued liabilities during the year ended 31 December 2019 and 2018 was as follows: 2019
Opening balance Reclassifications Increases Reversals Uses Other Closing balance
Current litigation 905 591 - 31 006 (31 524) (116 227) 1 900 790 746 Provisions for environmental matters 5 331 220 - 848 490 - - - 6 179 710 Other risks and charges 2 435 203 767 601 1 038 594 (433 276) (215 904) 14 283 3 606 500 8 672 014 767 601 1 918 090 (464 800) (332 131) 16 183 10 576 957
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SUMA · Consolidated Annual Accounts 2019 | 111 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 At 31 de December(Amounts de 2019 expressed (Amounts expressed in euros) in euros)
2018
Opening balance Reclassifications Increases Reversals Uses Closing balance
Current litigation 1 348 301 - 76 264 (397 398) (121 576) 905 591 Provisions for environmental matters 4 708 462 - 622 758 - - 5 331 220 Other risks and charges 2 570 391 - 774 472 (693 440) (216 220) 2 435 203 8 627 153 - 1 473 495 (1 090 838) (337 796) 8 672 014
The accrued liabilities recorded under “Current litigation” are intended to cover liabilities arising from lawsuits brought against the group, based on the opinion of lawyers and the historical experience of these types of litigation.
The amounts recorded under the caption “Environmental matters” correspond to accrued liabilities for the sealing and monitoring of landfills, and are recorded according to the amount of waste deposited in the landfill.
The amounts recorded under the caption “Provisions for other risks and charges” correspond to provisions recorded to cover terminations of employment contracts arising from the legal obligation to indemnify, at the end of the service contracts entered into with the various Municipalities, employees who are performing duties under those contracts by virtue of their termination of employment. The reversals recorded relate to the renewal and extension of service contracts.
In 2008, following an international tender for the "collection of municipal solid waste in the high-density areas of Maputo city", EGF established a complementary group of companies ("ACE") with the local company Neoquímica Moçambique Limitada, called EGF/Neochemistry, of which 75% is held by EGF and 25% by the local company. For the development of this agreement, ACE provided undifferentiated collection services in the city of Maputo, for a period of approximately 36 months. Although this agreement was terminated in October 2011, it has not yet been possible to complete the process of termination of this company, as a result of the liquidation of all its assets and liabilities. Taking into consideration the business development and prospects of potential losses, all balances related to this contract are accrued under other risks and charges, in the amount of 395,879 euros.
A reinforcement was recorded, which was recognised directly in tax, in the amount of 767,601, referring to a tax settlement statement of the subsidiary AMARSUL in March 2020.
22. BORROWINGS
Borrowings, at 31 December 2019 and 2018, have the following composition:
2019 2018 Non-current Current Non-current Current
Loans 168 097 397 102 273 730 179 088 212 63 032 252 Finance leases 26 445 520 7 309 829 12 991 905 6 774 849 194 542 917 109 583 559 192 080 118 69 807 102
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112 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
22.1. Loans
Loans at 31 December 2019 and 2018 consist of the following: 2019 2018 Non-current Current Non-current Current
Bank loans 145 015 215 43 983 468 152 316 938 37 418 331 Commercial paper loan 23 000 000 8 500 000 26 500 000 5 000 000 Bank overdrafts - 8 469 233 - 563 934 Guaranteed current accounts - 21 152 456 - 8 450 054 Factoring - 10 004 209 - - Loans from related parties (Note 24) - - 24 728 2 853 Other borrowings 82 182 10 164 364 246 546 11 597 080 168 097 397 102 273 730 179 088 212 63 032 252
In accordance with the financing agreements concluded, debenture loans and bank loans have the following repayment plans:
2019 2018
2018 (a) - 2019 - 37 418 330 2020 52 483 468 152 316 938 2021 and later 168 015 216 -
220 498 683 189 735 269
As of 31 December 2019 and 2018, the bank loans bear interest at rates ranging from 2.48% and 3.75%.
During the year ended 31 December 2014, the company took out a loan, from a BPI-led syndicate, in connection with the acquisition of EGF and for a total of 70,000,000.00 euros, with 68,750,885.81 euros having been disbursed as of 31 December 2017 as initial credit and part of the subsequent credit.
The objective of the loan was to support SUMA Tratamento (a subsidiary company) in the acquisition of EGF, and has been subject to semi-annual amortisation since May 2016. In addition, it assumed financial commitments (Covenants) associated, namely, with net financial debt/EBITDA, the debt service coverage ratio and, as well, letters of comfort were issued. The debt to this Syndicate is net of the financial charges paid at the date of conclusion of the contract.
It should also be mentioned that, as the company failed to comply with the covenant relating to the debt service coverage ratio, in December 2019, the company obtained a letter from BPI referring to the waiving of the right of the banks of the syndicate to accelerate the liabilities arising from the contract. The remaining covenants are in compliance as of 31 December 2019.
As a result of the finance contract for the acquisition of 95% of EGF concluded on 5 November 2014, the Company assumed certain responsibilities and covenants, which are being fulfilled. As part of that financing, the covenant to be fulfilled corresponds to the “Debt-service coverage ratio” as determined from the consolidated financial statements. In the event of any default, the financial institution may request the early repayment of the financing and/or a change in the terms of the financing agreed previously.
Additionally, EGF, SUMA and SUMA Tratamento must not cease to directly or indirectly hold the current percentage interests in SUMA Tratamento, EGF and the concessionaires, respectively.
As part of that loan, the covenants to be fulfilled correspond to the “Net remunerated debt ratio/EBITDA” and “EBITDA/Accrued interest” at the level of EGF’s consolidated financial statements, which should not exceed the parameters of 3.5 and 4.5, respectively, and also to the “Net remunerated debt ratio/BAR” at the level of
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the individual statements of the Companies, which should not exceed the parameters between 0.75 and 1.5. In the event of default, the financial institution may request the early repayment of the loan and/or a change to the previously agreed terms of the loan.
The Board of Directors understands that there is no situation of default in relation to the obligations arising from the aforementioned Facility Agreement, either in terms of the maintenance of the main holdings in the subsidiaries or financial covenants.
Additionally, as a guarantee of full compliance with these loans, the company issued blank promissory notes and assumed the pledge of the shares held on EGF’s capital, in favour of the banking syndicate led by BPI.
For the debenture loan arranged by the MG, the company assumed associated covenants, namely, a negative pledge and cross default.
Additionally, as collateral for the various loans, there are several blank signed promissory notes, as well as autonomous guarantees from the Reciprocal Guarantee Companies (Garval and Lisgarante).
As of 31 December 2019 and 2018, the pledged current accounts bore interest at rates ranging from 2% to 3.25% and 2% to 3.25%, respectively and are subject to renewal for successive periods of three, six and twelve months until terminated by one of the parties. Additionally, as a guarantee of full compliance with these loans, the company issued blank promissory notes.
During the year ended 31 December 2016, the Current Account Application Agreement contracted at Banco Santander was changed to a grouped agreement in the amount and with an overall limit of 3,100,000.00 euros. Under this loan, the Company’s use limit amounts to 3,100,000.00 euros. At that date, 1,580,000.00 euros had been used, and it bears interest at current market rates. The companies benefiting from the agreement jointly assume liability for the fulfilment of this loan. Additionally, on 6 January 2017, the Company signed an amendment to the agreement under which the overall limit was increased to 9,100,000.00 euros with effect from 18 January 2018.
In 2018, with the acquisition of Banco Popular by Santander Totta, the Popular Grouped Overdraft and the Santander Grouped CCC were reverted to a Santander Grouped Overdraft with effect from 04/05/2018 in an amount and subject to an overall limit of 13,100,000.00 euros, between the companies SUMA, SUMA Matosinhos, SUMA Porto, SIGA, RIMA, TRIU e TRIAZA.
The bank overdraft granted by BPI is a pooled loan maturing in April 2020, which can be automatically renewed for successive periods of six and twelve months and the amount of 1,361,972.46 euros was used in 2019. Additionally, Suma Group companies jointly and severally assume liability for compliance with this financing. Under this financing agreement, the companies undertook to maintain the current shareholder structure.
The remaining bank overdrafts may be renewed for successive periods of six and twelve months, blank promissory notes having been given as a guarantee of full performance.
For the commercial paper with CGD, the company entered into covenants associated with the negative pledge.
At 31 December 2019 and 2018, the Company had credit limits approved and unused in amounts of approximately 17,054,134.75 euros and 30,833,037.41 euros, respectively.
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22.2. Leases
Financial leases:
As of 31 December 2019 and 2018, the Group had the following assets under a finance leasing arrangement: 2019 2018 Regulatory Accumulated Regulatory Regulatory Accumulated Regulatory assets depreciation assets assets depreciation income
Right of Use of Infra Structures 24 318 998 2 906 001 21 412 997 12 163 738 1 461 701 934 128 Buildings and other structures 1 829 203 867 206 961 997 1 852 507 804 609 966 308 Basic equipment 1 598 608 496 953 1 101 655 1 676 556 582 695 1 309 652 Transport equipment 21 431 718 5 123 146 16 308 572 17 084 055 6 799 126 10 893 754 Other tangible assets 210 150 71 934 138 216 225 860 36 997 - 49 388 677 9 465 240 39 923 437 33 002 716 9 685 127 14 103 842
The Group is lessee in financial lease contracts mainly related to the acquisition of transport vehicles, washing equipment and cranes.
At 31 December 2019 and 2018, the group’s liabilities for maturing finance lease payments, including principal and interest, amounted to 34,397,932 euros and 20,036,642 euros, respectively, and fall due in the coming years as follows:
2019 2018
Up to 1 year 7 555 004 6 914 544 Between 1 and 5 years 26 842 928 13 122 098 34 397 932 20 036 642
Operating leases:
The group is a lessee in operating leases essentially related to the acquisition of light vehicles.
The operating lease contracts in force do not have contingent rents. The rents of operating lease contracts fall due as follows:
2019 2018
Up to 1 year 361 800 444 827 Between 1 and 5 years 238 791 371 476 600 591 816 303
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23. TRADE CREDITORS AND OTHER PAYABLES
At 31 December 2019 and 2018, the caption “Trade creditors” consists of:
2019 2018
Suppliers, non-current account: General 133 685 20 584
Suppliers, current account: General 22 905 472 21 781 665 Related parties (Note 24) 7 399 490 7 398 255 Receipt and checking of invoices 3 544 126 2 817 640
33 849 088 31 997 561
As of 31 December 2019 and 2018, the caption “Other payables” consists of:
2019 2018
Other payables, non-current: Regulatory liabilities (a) 15 891 826 18 014 936 Investment providers 287 140 314 149 Other creditors 25 000 58 617 Related parties (Note 24) - - 16 203 966 18 387 702
Other payables, current: Investment providers 32 102 254 19 741 131 Advances from customers - 423 835 Shareholders (Note 24) 8 531 572 8 547 375 Creditors by accrued expenses: Accrued payroll 10 849 377 9 769 870 External supplies and services 1 055 670 654 465 Interest payable on financing 283 473 330 544 Balance sheet allowances / staff bonuses 240 000 240 000 Related parties (Note 24) 166 108 337 928 Other 4 761 752 5 125 072 Regulatory liabilities (a) 6 204 743 7 243 020 Other general creditors 4 927 520 2 316 903 Related parties (Note 24) 4 568 630 7 100 826 73 691 099 61 830 969
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(a) During the years ended 31 December 2019 and 2018, movements in this heading were as follows:
2019 2018
Opening balance 25 257 956 27 560 500 Use (3 161 387) (2 302 544) Closing balance 22 096 569 25 257 956
The amount of Regulatory Liability used was due to the fact that in certain concessionaires there was an annual change in tariffs of more than 2% of the yearly allowable income (Note 3.19).
24. RELATED PARTIES
Shareholders:
As mentioned under Note 19, the company is 61.5% owned by the Mota-Engil group and 38.5% owned by Urbaser (a company based in Spain and part of the ACS group).
Key management personnel
Given the company’s governance structure and the decision-making process, the company only considers the Board of Directors as “management key personnel”. During the years ended 31 December 2019 and 2018, the Board of Directors received remuneration of 372,916 euros and 297,284 euros, respectively (Note 27).
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Transactions with related parties
During the years ended 31 December 2019 and 2018, the following transactions were carried out with related parties: 2019
Interest and Cost of goods sold Supplies and similar Interest and Acquisition of Purchases of Purchase and materials external Payroll Other expenses Sales and Other similar income Right of Use of tangible fixed of consumed services Expenses expenses incurred services provided income earned Related parties Infra Structures assets inventories (Note 14) (Note 26) (Note 27) (Note 29) (Note 32) (Note 25) (Note 28) (Note 31)
Águas de S. João e M, SA ------7 393 - - Agrimota ------41 - - Ambiolhão EM ------794 539 - - Aqualevel ------86 709 - - Ascendi IGI - - 2 102 - - - - - 37 559 - - Ascendi Operadora PI, SA ------274 - - ASCENDI OPERADORA GP - OP MAN RODOV ------798 - - Ascendi O&M, SA - - - - 25 031 ------Biosmart, SA - - - 60 000 - - - 7 890 - - Lousada Municipal Council - 26 - - 160 898 - 6 813 - - - - Carlos Augusto P.Santos & Fil.,Lda - - - - 552 - - - 3 053 - - Carmona - Sociedade de Limpeza e Tratamento Combustiveis - - - - 30 977 ------Clean Eburnie, SARL ------25 544 - - CITRUP - 38 000 - - 1 259 - - - 32 010 - - CONSITA ------35 276 - ECOLEZÍRIA - - - - 1 988 - - - 269 746 - - ECOLIFE ------2 856 - - Eco Eburnie ------18 685 - - EMAR - Água e Resíduos de Vila Real, EM ------587 060 - - EMARP - Emp. Mun. Ág. Res. Portimão EM - - - - 55 545 - - - 1 111 002 - - FAGAR - Faro, Gestão Água Resíduos EM ------1 053 602 - - Parishes of Faro Sé and S.Pedro ------2 941 - - GESAR - Gestão de Águas Resíduais, ACE ------46 416 200 - Geres Participações, SA ------12 164 Iberfibran - - 93 - 63 - - - 2 419 - - Infralobo - Emp Infr. Vale do Lobo EM ------79 950 - - Inframoura - Emp. Infr. Vilamoura, EM - - - - 1 543 - - - 304 026 - - Infraquinta - Emp. Infr. Quinta do Lago EM - - - - 10 410 - - - 102 524 - - Indaqua Matosinhos ------27 251 - - Indaqua Oliveira de Azeméis - - 379 - 211 - - - 5 890 - - Indaqua Vila do Conde - - - - 7 617 - - - 3 378 - - José Maria Ferreira & Filhos, Lda - - - 311 871 ------Largo do Paço, Lda - - - - 781 ------Lena Eng. E construção, SA - - - - 575 - - - 8 - - Liscont ------38 041 - - Lusoponte - Concessão Travessia Tejo, SA - - - - 361 - - - 50 958 - - Manvia 732 300 80 180 - - 939 786 - - - 16 973 4 111 - Manvia II ------7 851 - - Manvia - Diagnósticos Eléctricos ACE - - - - 624 929 ------MANVIA MANT. DE INSTALAC. ,SA ------8 050 - - Marques Ambiente, Lda. - - - 125 ------Marques Britas - - - - 3 509 ------Marques Comercio a Retalho - - - - 26 ------Martifer ------634 - - Mota-Engil - Africa ------14 000 - - Mota-Engil, SGPS - - - - 613 845 9 734 20 431 - - 105 300 51 692 Mota-Engil, Serviços Partilhados, SA 3 685 - - - 1 154 583 1 667 - - 380 - - Mota-Engil, Engenharia e Construção 49 126 20 013 - - 3 219 625 5 351 3 735 - 597 794 70 189 - Mota-Engil Europa - - - - 1 781 520 ------Mota-Engil Mozambique Branch ------323 415 - - Mota-Engil Ivory Coast, Sarl ------73 856 - Mota-Engil Imob. e Turismo - - - - 10 203 ------Mota-Engil Real Estate SGPS,SA - - - - 214 706 - - - 16 921 - - Mota-Engil Railway Engineering ------6 419 - - MOTA/ACCIONA/EDIVISA-ACE ------1 536 - - Municipalities of the Algarve - - - - 36 703 - - - 6 437 016 86 051 - Municipalities of the South Bank of the Tagus - - - - 49 401 - 645 - 10 893 515 35 331 - Municipalities of the Central Coast - - - - 98 814 - - 18 627 10 386 873 32 015 - Municipalities of Cova da Beira - - - - 124 472 - - - 1 618 929 1 335 - Municipalities of Central North ------3 575 744 - - Municipalities of Vale do Lima and Baixo Cávado - - - - 177 186 - - - 1 005 450 - - Municipalities of the South of the Douro - - - - 9 759 - - - 3 335 168 - - Municipalities of North Alentejo - - - - 19 017 - - - 5 524 044 20 078 44 233 Municipalities of Upper Extremadura - - - - 3 754 - - - 3 178 788 - - Municipalities of Vale do Minho ------292 704 - - Municipalities of Lisbon and the West Regions - - - 6 249 671 1 257 920 - 256 - 7 334 212 15 063 408 Municipality of Santo Tirso ------875 266 - - Municipality of Vila Nova de Famalicão ------1 350 297 - - Municipality of Peso da Régua ------214 359 - - Municipality of Guimarães ------1 799 307 - - Municipality of Fafe ------478 902 - - Municipality of Vizela ------266 937 - - Municipality of Mesão Frio ------51 890 - - Municipality of Santa Marta de Penaguião ------75 187 - - Municipality of Sabrosa ------74 039 - - Municipality of Murça ------63 871 - - Municipality of Alijó ------146 534 - - S.S. Bioenergias, SA ------11 104 - - Saiotes & Etc-Festas, Lda - - - 6 062 - 6 177 - - - - SMAS Alm ada - - - - 450 - - - 57 917 417 - Serv.Int.Águas e Resíduos Municípios Loures e Odivelas - - - 1 080 442 552 645 - 9 652 - 1 789 939 3 543 - Serviços Municip.Câmara Municipal Concelho Nazaré - - - - 2 192 - - - 121 955 - - Socarpor ------7 180 - - Sotagus ------31 593 - - Scutvias - - - - 19 ------Sunviauto ------23 661 - - Taviraverde EM - - - - 68 839 - - - 554 172 - - Transitex ------280 - - Treciver ------985 - - Trofáguas - Serviços Ambientais, E.M. ------500 714 - - Urbaser - - - - 399 996 ------Urbaser (Branch) - - - - 300 000 ------Vibeiras - - - - 38 223 - - - 84 892 - - VISTA Waste - - - - 2 570 - - - 812 080 376 759 - Vortal - - - - 4 266 ------ME Capital - - - - 129 554 ------Serv Mun. Caldas Rainha Municipal Council Water and Sanitation ------68 795 - - 785 111 138 219 2 574 7 330 113 12 514 381 16 752 47 709 18 627 68 740 835 859 524 108 497
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2018
Interest and Cost of goods sold Supplies and similar Interest and Disposals Acquisition of Purchase and materials external Payroll Other expenses Sales and Other similar income Tangible fixed Right of Use of of consumed services Expenses expenses incurred services provided income earned assets Related parties Infra Structures inventories (Note 14) (Note 26) (Note 27) (Note 29) (Note 32) (Note 25) (Note 28) (Note 31) (Note 7)
Águas de S. João e M, SA ------4 984 - - - Ambiolhão EM ------904 557 - - - Aqualevel ------13 221 - - - Areagolfe - Gestão Campos Golfe, SA ------1 721 - - - Ascendi IGI ------32 588 - - - Ascendi Operadora DI ------685 - - - Ascendi Operadora CP ------553 - - - Ascendi Operadora PI, SA ------621 - - - Ascendi O&M, SA - - - 156 ------Lousada Municipal Council - - - 1 674 - 8 983 - - - - - Carlos Augusto P.Santos & Fil.,Lda ------2 670 - - - Carmona - Sociedade de Limpeza e Tratamento Combustiveis - - - 88 551 ------Covelas Energias, Lda. ------18 312 - - - CITRUP ------37 291 - - - CONSITA ------8 896 - - ECOLEZÍRIA - 4 074 - 534 - - - 152 369 - - - ECOLIFE ------102 838 - - - Eco Eburnie ------69 000 80 820 - 100 EMAR - Água e Resíduos de Vila Real, EM ------597 202 - - - EMARP - Emp. Mun. Ág. Res. Portimão EM - - - 34 603 - - - 1 280 324 - - - FAGAR - Faro, Gestão Água Resíduos EM - - - 1 020 - - - 1 193 772 - - - Civil Parishes of Faro Sé and S.Pedro ------1 502 - - - GESAR - Gestão de Águas Resíduais, ACE ------40 872 - - - Iberfibran - - - 196 - - - 1 711 - - - Infralobo - Emp Infr. Vale do Lobo EM ------102 394 - - - Inframoura - Emp. Infr. Vilamoura, EM - - - 1 225 - - - 363 681 - - - Infraquinta - Emp. Infr. Quinta do Lago EM ------116 158 - - - Indaqua Feira - - - - - 2 671 - - - - - Indaqua Matosinhos ------75 891 - - - Indaqua Oliveira de Azeméis - 834 - - - - - 5 768 - - - Indaqua Vila do Conde - - - 25 304 - - - 4 024 - - - Largo do Paço, Lda - - - 225 ------Liscont Operadores Contentores, SA ------40 885 - - - Lena Eng. E construção, SA - - - 787 ------Lena Ambiente, SA ------1 086 - 7 069 - Lusoponte - Concessão Travessia Tejo, SA - - - 203 ------Manvia 333 947 - - 342 868 - - - 13 038 - - - Manvia II - - - 2 400 - - - 920 - - - Manvia - Diagnósticos Eléctricos ACE - - - 908 449 - 355 105 - - - - - Manvia-Lena Ambiente, ACE ------324 - - - MANVIA MANT. DE INSTALAC. ,SA - - - - - 100 - - - - - Marques, SA ------289 - - Marques Britas - - - 3 779 ------Marques Comércio a Retalho - - - 22 ------Mota-Engil - Africa - - - 73 ------Mota-Engil, SGPS - - - 225 683 2 283 14 119 - - - 49 982 - Mota-Engil, Ambiente e Serviços - - - 30 000 - - - - 5 - - Mota-Engil, Serviços Partilhados, SA - - - 782 343 586 3 931 - - 6 428 - - Mota-Engil, Engenharia e Construção 15 722 234 - 3 185 019 14 714 7 598 - 166 549 32 295 - - Mota-Engil Europa - - - 1 686 240 ------Mota-Engil Branch Panama ------256 11 696 - - Mota-Engil Ivory Coast, Sarl ------154 583 - - Mota-Engil Latam Colombia SAS - - - - - 11 952 - - - - - Mota-Engil Imob. e Turismo - - - 5 436 ------Mota-Engil Real Estate SGPS,SA - - - 66 190 - - - 24 022 - - - Mota-Engil Renewing, SA - - - 80 000 ------MOTA/ACCIONA/EDIVISA-ACE ------1 143 - - - Municipalities of the Algarve - - - 45 340 - - - 7 314 477 79 365 - - Municipalities of the South Bank of the Tagus - - - 40 663 - - - 8 140 849 - - - Municipalities of the Central Coast ------11 808 325 14 643 11 063 - Municipalities of Cova da Beira - - - 124 160 - - - 1 830 657 346 346 - Municipalities of Central North ------3 747 581 - - - Municipalities of Vale do Lima and Baixo Cávado ------1 719 587 - - - Municipalities of the South of the Douro - - - 246 510 - - 54 167 3 264 312 - - - Municipalities of North Alentejo - - - 12 749 - - - 5 520 648 30 442 188 533 - Municipalities of Upper Extremadura ------2 491 088 - - - Municipalities of Vale do Minho ------479 353 - - - Municipalities of Lisbon and the West Regions - - 5 866 163 1 146 526 - 4 562 - 10 206 726 7 504 14 913 - Municipality of Santo Tirso ------875 742 - - - Municipality of Vila Nova de Famalicão ------1 343 512 - - - Municipality of Peso da Régua ------221 558 - - - Municipality of Guimarães ------1 831 051 - - - Municipality of Fafe ------487 521 - - - Municipality of Vizela ------273 485 - - - Municipality of Mesão Frio ------52 341 - - - Municipality of Santa Marta de Penaguião ------77 778 - - - Municipality of Sabrosa ------75 651 - - - Municipality of Murça ------64 319 - - - Municipality of Alijó ------144 101 - - - Novo Banco, SA - - - 399 ------Portvias - - - 19 ------Prometro ------31 334 - - - S.S. Bioenergias, SA ------4 472 - - - SMAS Alm ada - - - 335 - - - 51 344 270 - - Serv.Int.Águas e Resíduos Municípios Loures e Odivelas - - 993 660 182 515 - 12 319 - 2 555 182 1 484 - - Serviços Municip.Câmara Municipal Concelho Nazaré ------169 817 - - - Socarpor ------8 606 - - - Sotagus ------31 756 - - - Scutvias - - - 168 ------Sunviauto ------24 121 - - - Taviraverde EM - - - 70 538 - - - 628 135 - - - TCL ------2 398 - - - Transitex - - - 201 - - - 1 112 - - - Takargo-Transp. Mercadorias, SA - - - 75 - - - 675 - - - Treciver ------847 - - - Trofáguas - Serviços Ambientais, E.M. ------510 499 - - - Urbaser - - - 210 000 - - - - - 31 029 - Urbaser (Branch) - - - 300 000 - - - - 100 - - Vibeiras - - - 52 024 - - - 27 232 - - - Via Verde Serviços, SA - - - 91 078 - - - - 147 - - VISTA Waste ------2 116 058 193 210 202 759 - Vortal - - - 5 358 ------349 669 5 143 6 859 824 10 001 636 17 583 421 340 54 167 73 507 183 622 524 505 694 100
The various municipalities identified above are considered related parties because they have a stake in several concessionaires.
The terms or conditions prevailing between the company and related parties are substantially the same as those that would normally be contracted, accepted and implemented between independent entities in comparable transactions.
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Balances with related parties
At 31 December 2019 and 2018, the group had the following balances with related parties:
2019 Clients, current Suppliers, current account Receivables Other receivables Accrued income account Shareholders Accrued expenses Other payables Related parties (Note 15) (Note 15) (Note 15) Deferral Assets (Note 15) (Note 23) (Note 23) (Note 23) (Note 23)
Aqualevel 28 208 - 2 413 - - 1 774 - - - Águas de São João e M, SA 1 583 ------Ambigere - - 2 534 - - 2 306 - - - AMBIBATALHA 35 771 ------Ascendi Grande Porto, A e do GP, SA - - - - - 1 - - - Ascendi IGI 10 494 - - - - 2 102 - - - Ascendi Operadora DI 726 ------ASCENDI OPERADORA GP - OP MAN RODOV 846 ------Ascendi Operadora PI, SA 290 ------Biosmart, SA - - - - - 73 800 - - - Lousada Municipal Council - - 1 480 - - - - 159 154 - Carlos Augusto P.Santos & Filhos - - - - - 231 513 - - - CITRUP 1 634 - - - - 46 740 - - - Clean Eburnie, SARL 25 544 ------CONSITA 45 667 ------Eco Eburnie, SA 262 545 ------ECOLEZÍRIA 61 697 - - - - 102 - - - ECOLIFE 105 693 44 471 ------EFACEC-ENGENHARIA E SISTEMAS ------343 Geres Participações, SA 12 164 1 674 300 2 006 930 ------Iberibran, SA 1 551 - - - - 23 - - - FAGAR - Faro, Gestão Água Resíduos EM 210 897 - - - - 126 - - - Infralobo - Emp Infr. Vale do Lobo EM 10 519 ------Inframoura - Emp. Infr. Vilamoura, EM 40 310 - - - - 153 - - - Infraquinta - Emp. Infr. Quinta do Lago EM 14 527 - - - - 2 560 - - - Ambiolhão EM 245 514 ------EMARP - Emp. Mun. Ág. Res. Portimão EM 203 412 ------EMAR - Água e Resíduos de Vila Real, EM 86 630 ------Civil Parishes of Faro Sé and S. Pedro 264 ------GESAR - Gestão de Águas Resíduais, ACE 16 857 ------GJL - Consultancy and Management, Limitada - 111 ------Lusoponte-Conces.Travessia Tejo SA 6 616 - - - - 33 - - - Indaqua Matosinhos 922 ------Indaqua Oliveira de Azeméis 874 - - - - 294 - - - Indaqua V. Conde 391 - - - - 128 - - - José Maria Ferreira & Filhos, Lda - - - - - 242 224 12 800 - - Largo do Paço - - - - - 1 263 - - - Liscont 8 525 ------Lokemark - - - - - 1 120 - - - Manvia 26 108 - - - 61 924 381 - 6 954 59 742 Manvia II - Condutas, Lda 11 585 ------Manvia - Diagnósticos Eléctricos ACE - - - - - 467 660 - - - Marques, SA 341 ------9 138 Marques Britas, Lda. - - - - - 2 272 - - - Marques Ambiente, Lda. - - - - - 148 - - - Martifer 2 384 - - - - 33 - - - Martifer energia 4 383 ------Mota-Engil Serviços Partilhados - - 1 830 650 - 350 018 - - 571 Mota-Engil Africa 17 220 - - - - 287 - - - Mota-Engil - Ambiente e Serviços 44 158 - 351 - - 11 5 067 600 - 34 772 Mota-Engil - SGPS 530 236 - - - - 308 138 - - 886 Mota-Engil Mozambique Branch 323 415 ------Mota-Engil Europa, SA - - - - - 1 626 326 - - - Mota-Engil Ivory Coast, Sarl 175 479 ------Mota-Engil Dominicana 2 327 ------Mota-Engil, Engenharia e Construção 1 136 535 - - - 334 1 369 749 - - 19 019 Mota-Engil Imob. e Turismo - - - 47 134 - 211 230 - - - Mota Engil Real Estate Portugal 7 423 ------Mota-Engil Branch Panama 11 952 ------MOTA-Engil Latam Colombia SAS 27 376 ------MOTA/ACCIONA/EDIVISA-ACE 118 ------Mota-Engil, Renewing, SA - - - - - 137 419 - - - ME-Central Europe Poland - - - - - 22 414 - - - Mota-Engil Railway Engineering 6 931 ------Municipalities of the Algarve 1 882 003 - 48 477 - - 1 076 - - - Municipalities of the South Bank of the Tagus 2 610 362 - - - - 41 - - - Municipalities of the Central Coast 2 176 129 - - - - 35 725 - - 246 Municipalities of Cova da Beira 700 352 - 38 532 - - 885 - - 114 Municipalities of Central North 1 124 260 ------Municipalities of Vale do Lima and Baixo Cávado 279 532 ------1 350 000 Municipalities of the South of the Douro 1 061 149 - - - - 9 759 - - - Municipalities of North Alentejo 1 110 957 5 399 694 37 260 - - 679 - - - Municipalities of Upper Extremadura 260 988 - - - - 500 - - - Municipalities of Vale do Minho 284 104 ------Municipalities of Lisbon and the West Regions 1 154 640 - 240 000 - - 809 143 - - 2 788 634 Municipality of Santo Tirso 299 676 ------Municipality of Vila Nova de Famalicão 159 126 ------Municipality of Peso da Régua 361 407 ------Municipality of Vizela 239 327 ------Municipality of Mesão Frio 52 109 ------Municipality of Santa Marta de Penaguião 8 254 ------Municipality of Sabrosa 13 532 ------Municipality of Murça 6 839 ------Municipality of Alijó 28 665 ------Rentaco - - - - - 700 - - - S.S. Bioenergias, SA 1 004 ------Saiotes & Etc-Festas, Lda - - - - - 15 045 - - - Socarpor Aveiro 1 405 ------Sonauta 57 363 ------Sotagus 5 409 ------Sunviauto 10 637 ------SUMA Brasil Participações ------407 Serv.Intermunicip.Águas e Resíduos Municípios Loures e Odivelas 549 952 - - - - 270 682 - - 44 928 Serviços Municipalizados Câmara Municipal Concelho Nazaré 25 876 ------Serv Mun. Caldas Rainha Municipal Council Water and Sanitation 33 636 ------SMAS Alm ada 16 758 ------Tanzifco LLC ------278 772 - - Taviraverde-Empresa Municipal de Ambiente, EM 97 950 - - - - 22 980 - - - Tracevia - - 65 ------Transitex 7 ------Trofáguas - Serviços Ambientais, E.M. 2 004 221 ------Urbaser 109 341 - - - - 122 500 3 172 400 - 35 000 Urbaser (Branch) 200 - 342 - - 61 500 - - - Treciver, SA 254 ------Vibeiras 67 151 - - - 10 556 18 039 - - - Vortal - - 233 - - 209 - - - VISTA Wate 12 422 565 71 697 242 146 - - 3 679 - - 224 830 32 985 782 7 190 273 2 622 593 47 784 10 951 7 399 490 8 531 572 166 108 4 568 630
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2018 Clients, current account Other receivables Suppliers, current account Shareholders Accrued expenses Other payables Related parties (Note 15) (Note 15) (Note 23) (Note 23) (Note 23) (Note 23)
Aqualevel 3 093 - - - 1 774 - Águas de São João e M, S.A. 2 222 - - - - - Ambigere - 5 067 2 306 - - - AMBIBATALHA 35 771 - - - - - Areagolfe 1 145 - - - - - Ascendi Grande Porto, A e do GP, S.A. - - 1 - - - Ascendi IGI 13 748 - - - - - Ascendi Operadora DI 726 - - - - - Ascendi Operadora CP 586 - - - - - Ascendi Operadora PI, SA 659 - - - - - Câmara Municipal da Lousada - - - - 203 171 - Carlos Augusto P.Santos & Filhos 1 630 - - - - - Carmona - Gestão Global de Resíduos Perigosos, S.A. - - - - - 12 146 Carmona - Sociedade de Limpeza e Tratamento Combustiveis - - 18 242 - - - CH&P Anadia 844 - - - - - CH&P Coja 5 473 - - - - - CITRUP 8 357 - - - - - Covelas Energia, Lda 2 732 - - - - - CONSITA 10 391 - - - - - Eco Eburnie,S.A. 243 860 - - - - - ECB - Suma Participações - 13 861 - - - - ECOLEZÍRIA 30 495 - - - - 205 ECOLIFE 102 838 113 471 - - - - Lena Ambiente, S.A. 1 151 - - - - - Lena Ambiente II, S.A. - - 287 - - - Iberibran, S.A. 1 548 - 2 819 - - - FAGAR - Faro, Gestão Água Resíduos EM 245 500 - 126 - - - Infralobo - Emp Infr. Vale do Lobo EM 12 518 - - - - - Inframoura - Emp. Infr. Vilamoura, EM 48 060 - 80 - - - Infraquinta - Emp. Infr. Quinta do Lago EM 17 820 - - - - - Ambiolhão EM 184 528 - - - - - EMARP - Emp. Mun. Ág. Res. Portimão EM 241 216 - 46 - - - EMAR - Água e Resíduos de Vila Real, E. M. 134 833 - - - - - Freguesias de Faro Sé e S.Pedro 513 - - - - - GESAR - Gestão de Águas Resíduais, ACE 6 455 - - - - - Taviraverde EM 118 596 - 12 026 - - - Lusoponte-Conces.Travessia Tejo SA - - 52 - - - Indaqua Matosinhos 9 182 - - - - - Indaqua Oliveira de Azeméis 596 - - - - - Indaqua V. Conde 37 - 640 - - - José Maria Ferreira & Filhos, Lda. - - 56 389 - - 12 800 Largo do Paço - - 1 263 - - - Liscont 4 661 - - - - - Lokemark - - - - 1 120 - Manvia 4 590 47 107 293 - 20 - Manvia II - Condutas, Lda. 3 049 - 169 783 - - - Manvia - Diagnósticos Eléctricos A.C.E. - - 808 659 - - - Manvia-MIIT-SERV.Beyond Maint. 467 - - - - - Marques Britas, Lda. - - 813 - - - Marques 341 - - - - - Martifer 1 712 - - - 33 - Martifer energia 4 759 - - - - - Mota-Engil Serviços Partilhados 447 290 12 757 486 478 - - 14 124 Mota-Engil África - - 73 - - - Mota-Engil - Ambiente e Serviços 44 158 347 9 225 5 067 600 - 8 Mota-Engil - SGPS 270 935 - 187 807 - - 370 Mota-Engil Europa, S.A. - - 965 550 - - - Mota-Engil Cote D`Ivoire,Sarl 154 583 - - - - - Mota-Engil Dominicana 2 327 - - - - - Mota-Engil, Engenharia e Construção 462 514 238 2 678 849 - 131 111 25 734 Mota-Engil Imob. e Turismo - 2 42 606 - - - Mota Engil Real Estate Portugal 10 480 - 1 118 - - - Mota-Engil Sucursal Panamá 11 952 - - - - - MOTA-Engil Latam Colombia SAS 27 376 - - - - - Mota-Engil, Pavimentações, S.A. - - - - - 2 388 MOTA/ACCIONA/EDIVISA-ACE 118 176 - - - - Mota-Engil, Renewing, S.A. - - 39 975 - - 96 434 ME-Central Europe Polónia - - - - - 1 764 MECE Business Support Center - - - - - 11 467 Municipalities of the Algarve 2 510 118 - 1 657 - - - Municipalities of theSouth Bank of the Tagus 1 863 523 15 85 - - - Municipalities of the Central Coast 2 178 068 - 40 436 - - 4 428 Municipalities of Cova da Beira 830 867 42 954 60 748 - - 106 Municipalities of Central North 1 129 721 - - - - - Municipalities of Vale do Lima e Baixo Cávado 371 143 - - - - 1 360 674 Municipalities of the South of the Douro 1 050 365 - - - - - Municipalities of North Alentejo 1 165 775 4 437 565 - - - - Municipalities of Upper Estremadura 138 901 - - - - - Municipalities of Vale do Minho 322 787 - - - - - Municipalities of Lisbon and West Regions 1 917 467 75 300 623 044 - - 5 297 486 Municipality of Santo Tirso 448 549 - - - - - Municipality of Vila Nova de Famalicão 123 192 - - - - - Municipality of Peso da Régua 260 714 - - - - - Municipality of Guimarães 169 958 - - - - - Municipality of Fafe 44 208 - - - - - Municipality of Vizela 25 630 - - - - - Municipality of Mesão Frio 47 405 - - - - - Municipality of Santa Marta de Penaguião 41 446 - - - - - Municipality of Sabrosa 11 858 - - - - - Municipality of Murça 11 682 - - - - - Municipality of Alijó 26 292 - - - - - Novo Banco, S.A. - 5 359 260 759 - - - Rentaco - - - - 700 - SMAS Alm ada 17 468 - 35 - - - Socarpor Aveiro 1 530 - - - - - Sonauta 57 363 - - - - - Sotagus 6 564 - - - - - Sunviauto 9 631 - - - - - SUMA Brasil Participações - - - - - 815 Serv.Intermunicip.Águas e Resíduos Municípios Loures e Odivelas 651 485 - 184 674 - - - Serviços Municipalizados Câmara Municipal Concelho Nazaré 48 810 - 216 - - - Takargo,S.A. 716 - - - - - Tanzifco LLC - - - 307 375 - - Transitex 167 - - - - - Trofáguas - Serviços Ambientais, E.M. 1 943 076 - - - - - Urbaser 197 540 - 461 173 3 172 400 - 35 000 Urbaser (Sucursal) 200 342 61 500 - - - Treciver, S.A. 266 - - - - - Vibeiras 32 735 - 109 865 - - - Vortal 233 - - - - 49 VISTA Wate 12 673 095 772 880 1 557 - - 224 830 33 268 983 5 480 380 7 398 255 8 547 375 337 928 7 100 826
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The balance payable recorded under “Shareholders” corresponds to the dividends distributed by the company to its shareholders for the year ended 31 December 2014.
25. SALES AND SERVICES RENDERED
The sales and services provided recognised by the group, in the years ended 31 December 2019 and 2018, are as follows: 2019 2018
Treatment of municipal solid waste 67 986 092 71 189 860 Sale of energy 49 224 018 48 039 684 Recyclable material 51 104 410 48 218 472 Collection and transport of municipal solid waste 33 993 644 30 694 350 Treatment of industrial waste 20 424 716 22 052 075 Cleaning and sweeping 13 982 363 16 145 536 Landfill/integrated systems management 7 792 181 6 535 414 Container maintenance 5 671 921 5 014 125 Industrial collection 2 337 219 3 825 020 Other 10 700 498 9 731 524
263 217 062 261 446 061
In the years ended 31 December 2019 and 2018, services were provided and sales made to related parties in the amounts of 68,740,835 euros and 73,507,183 euros, respectively (Note 24).
26. SUPPLIES AND SERVICES
The caption “External supplies and services”, in the years ended 31 December 2019 and 2018, had the following composition: 2019 2018
Maintenance and repair 22 543 586 22 074 571 Specialised work 31 885 013 28 115 656 Fuels 22 634 692 21 221 554 Insurance 5 435 747 4 681 341 Leases and rents 4 832 953 4 180 717 Surveillance and security 3 330 479 3 053 581 Transport, travel and accommodation 2 103 912 1 744 246 Subcontracts 2 213 263 1 605 573 Water and electricity 816 050 809 368 Communications 661 715 626 713 Commissions and fees 311 736 332 135 Management charges 1 008 137 992 541 Other supplies and services 9 053 380 7 872 484 106 830 664 97 310 480
In the years ended 31 December 2019 and 2018, services provided by related parties were obtained in the amounts of 12,514,381 euros and 10,001,636 euros, respectively (Note 24).
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27. STAFF COSTS
The heading “Payroll expenses” for the years ended 31 December 2019 and 2018, is as follows: 2019 2018
Remuneration of employees 73 457 394 68 727 726 Charges on remuneration 15 283 084 13 963 658 Insurance 3 219 755 3 018 180 Payments to directors (Note 24) 372 916 297 284 Compensation payments 103 045 224 815 Social action expenses 111 733 85 465 Other 4 035 345 3 161 292
96 583 272 89 478 418
The average number of workers employed by the group in the years ended 31 December 2019 and 2018 was as follows:
2019 2018
Employees 4 725 4 621 Employees assigned by municipal councils 7 14
4 732 4 635
28. OTHER INCOME
The caption “Other income”, in the years ended 31 December 2019 and 2018, is as follows:
2019 2018
Construction income in right of use of infrastructure 85 046 170 55 922 690 Compensation payments associated with claims 205 265 1 076 680 Arrears interest charged to customers (Note 15) 503 604 744 739 Corrections relating to previous years 26 837 129 867 Cash discounts received 239 122 219 807 Gains from sales of tangible fixed assets 759 970 486 957 Financial discounting of trade receivables (Note 15) 102 067 8 212 Exchange differences 164 964 564 472 Other additional income 2 341 938 3 387 347 89 389 937 62 540 771
In the years ended 31 December 2019 and 2018, other income was obtained from related parties in the amounts of 859,524 euros and 622,524 euros, respectively (Note 24).
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29. OTHER EXPENSES
The caption “Other expenses”, in the years ended 31 December 2019 and 2018, has the following composition: 2019 2018
Construction expenses in right of use of infrastructure 85 046 170 55 922 690 Taxes 2 103 438 3 035 474 Undocumented expenses 251 449 620 891 Donations and contributions to employer’s associations 218 527 250 366 Cash discounts allowed 587 4 958 Corrections relating to previous years 202 123 152 318 Currency revaluation 19 623 64 Compensation payments 96 065 431 507 Losses on disposals/write-offs of tangible fixed assets 56 671 91 779 Contractual penalties 42 157 13 250 Bad debt write-offs 297 125 Other 902 908 496 085
88 940 015 61 019 507
In the year ended 31 December 2019 and 2018, the group incurred other expenses with related parties amounting to 47,709 euros and 421,340 euros, respectively (Note 24).
30. DEPRECIATION AND AMORTIZATION EXPENSES
The caption “Depreciation and amortisation expenses” for the years ended 31 December 2019 and 2018 has the following composition:
2019 2018
Tangible fixed assets (Note 7) 7 605 239 7 323 885 Intangible assets (Note 10) 33 313 768 36 020 351 Investment properties (Note 8) 783 1 104 40 919 790 43 345 339 Goodwill (Note 9) 929 742 929 742 41 849 533 44 275 082
31. INTEREST AND SIMILAR INCOME EARNED
The income and gains from financing, recognised in the years ended 31 December 2019 and 2018, have the following composition: 2019 2018
Interest received: Deposits and short-term investments 415 395 320 591 Financing granted to related parties (Note 24) - 511 474 Similar income received: Other 1 773 189 2 064 843 2 188 584 2 896 908
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32. INTEREST AND SIMILAR EXPENSES INCURRED
Financing expenses and losses, recognised in the years ended 31 December 2019 and 2018, are as follows: 2019 2018
Interest payable 10 308 061 9 913 731 Stamp Duty 625 661 618 256 Other 1 350 410 2 318 282 12 284 132 12 850 268
33. BANK GUARANTEES
As of 31 December 2019 and 2018, the group had requested the issuance of bank collateral provided to third parties (namely to Municipal Councils and Association of Local Authorities), due to contractual requirements, as follows:
2019 2018 BPI: Portuguese State 2 839 524 2 915 841 DGGE 20 000 20 000 EDP - Distribution 918 918 Municipal Chambers and Associations 858 867 910 723 Banco Muscat (a) 1 600 701 2 234 385 Santo Tirso Labour Court 14 014 14 014 Leiria Labour Court - 1st Court 8 222 8 222 EDP - Serviço Universal, SA - 1 471 Northern Regional Development Coordination Commission 47 215 47 215 5 389 461 6 152 789
BCP: Portuguese State 3 911 154 3 549 303 Municipal Chambers and Associations 1 864 189 2 177 700 Lisbon Finance Services no 14 211 156 211 156 Court of Law Judicial Sub-District of Porto Este - Penafiel Labour Court - 187 000 and Court County Porto Este -Labour Court of Vila Nova de Gaia 1st Court 3 224 3 224 APA - Portuguese Environment Agency 100 000 100 000 Tax and Customs Authority 1 000 1 000 APA - Aveiro Port Administration 16 381 16 381 Court of Viana do Castelo 5 509 5 509 6 112 613 6 251 273
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2019 2018 CGD: Municipal Chambers and Associations 1 557 191 1 715 601 Portuguese State - 285 534 Banco Muscat (a) 2 132 772 2 957 776 MARL - Lisbon Regional Supply Market 56 706 56 706 Musami, EIM 50 400 50 400 LIPOR 61 800 61 800 ANA - Aeroportos de Portugal, SA 78 077 75 945 EPAL - Empresa Port. de Àguas Livres 15 772 15 772 EMARVR - Água e Resíduos de Vila Real, E.M., SA - 971 APA - Portuguese Environment Agency 8 400 8 400 University of Aveiro 16 535 16 535 ROTREAT GmbH - 100 000 EDP - Distribution 13 485 13 485 IAPMEI 563 066 888 933 DGGE 5 375 5 375 SIMAR - 17 350 4 559 579 6 270 584
Caja Duero: Municipal Chambers and Associations 138 769 138 769 APA - Portuguese Environment Agency (RIMA) 90 913 90 913 229 682 229 682
Novo Banco: E.P. - Estradas de Portugal, SA 16 212 16 212
Mafpre: Municipal Chambers and Associations - 216 729
Cosec: Ecoleziria 18 073 7 205 Municipal Chambers and Associations 876 414 830 575 Infraestruturas de Portugal, SA 44 010 44 010 LIPOR - Serv. Intermunicipalizado de Gestão de Resíduos do Grande Porto 3 962 3 015 942 459 884 805
Santander Totta: Municipal Chambers and Associations 20 854 120 417 Portuguese State 1 732 307 1 732 307 Lisbon and Vale do Tejo Regional Development Coordination 92 514 92 514 Repsol, SA 500 000 500 000 2 345 675 2 445 238
Montepio Finipredial - Fundo de Investimento Imobiliário Aberto - 95 509
ABARCA - Companhia de Seguros, SA Municipal Chambers and Associations 2 113 143 1 551 350 SIMAR 20 169 - LIPOR 23 436 - University of Coimbra 5 016 - University of Coimbra Social Action Services 4 828 - 2 166 592 1 551 350
Banco Muscat (a): Oman Environment Services Holding C.O. (S.A.O.C) 1 463 440 1 463 440
Total Bank Guarantees 23 225 713 25 577 610
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a) In the course of the financial year ending on 31 December 2015, the company provided counter- guarantees to Banco Muscat, within the framework of the competition to provide services to “Bee’ah”, entered by the Omani branch, and the borrowings by the branch under the contract for the provision of those services.
As of 31 December 2019 and 2018, the Group had the following financial bank guarantees:
Financial bank guarantees: 2019 2018 EIB 10 058 565 14 916 170 Santander Totta EIB 10 058 563 14 916 168 Montepio EIB 9 148 729 13 566 941 Millennium BCP EIB 6 099 152 9 044 630 CGD 35 365 009 52 443 909
34. EARNINGS PER SHARE
Earnings per share for the years ended 31 December 2019 and 2018 were determined as follows:
2019 2018
Net income for the year 7 425 253 13 670 655 Number of shares (Note 18) 250 000 250 000 Earnings per share 29,70 54,68
Due to the fact that there are no situations giving rise to dilution, the net diluted reimbursement per diluted share is equal to the net earnings per basic share.
35. FINANCIAL RISK MANAGEMENT
The Group is essentially exposed to the following financial risks:
Interest rate risk
The interest rate risks are essentially related to the interest paid on the contracting of various loans with variable interest rates.
Liquidity risk
Liquidity risk may occur if sources of financing, such as operating cash flows, divestiture, credit lines and cash flows obtained from financing operations, do not meet financing needs, such as cash outflows for op- erating and financing activities, investments, shareholder remuneration and debt repayment.
To reduce this risk, the group seeks to maintain a net position and an average debt maturity that allows it to repay its debt in appropriate time frames. In the opinion of the Board of Directors, taking into account the main cash flow projections for 2019 and the structure and type of its assets, the group does not foresee dif- ficulties in settling its current financial liabilities.
Although as of 31 December 2019, a negative working capital amounting to 74M € is shown, on this date the amounts of available and unused medium and long term credit are 101.5M €, leasing of 20.1M € and also correct accounts of € 22.5M.
Regulatory Risk
The gains recorded each year by each concessionaire are essentially derived from the assumptions consid- ered by the regulator ERSAR in the definition of the regulated tariffs for the waste treatment and manage- ment sector.
On 6 March, Law no. 10/2014 was published, which approved the new Statutes of the ERSAR. This publica- tion comes in the course of Law no 67/2013, of 28 August, which approved the framework law of independ- ent administrative entities with functions of regulating the economic activity of the private, public and coop- erative sectors. According to the new statutes, the operational independence of the ERSAR has increased
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(Article 2), the range of entities subject to regulation has been expanded (Article 4) and its powers and du- ties in relation to the regulated entities have been strengthened (Articles 5, 9, 10 and 11). In view of the changes being implemented in the waste sector, strengthening ERSAR’s powers poses a significant chal- lenge for both the regulator and the regulated entities. It is expected that, with this strengthening of ERSAR’s powers, the sector will adopt an agenda in line with its stage of development, focusing on sustain- ability in a manner conducive to the integration of economic, social and environmental aspects.
During 2014, putting the new regulatory powers of ERSAR into practice, the RTR – tariff regulation of the urban waste management service, resolution no. 928/2014, was published in the Diário da República, 2nd series, of 15 April. This regulation took effect on 1 January 2016 and led to a change in the prevailing regu- latory model, moving from a cost-plus model to a revenue cap model, which remunerates an asset base at the cost of capital and allows the recovery of operating expenses within a scenario of productive efficiency. At this date, a set of financial information is awaiting approval by ERSAR, which will eventually result in a tariff deviation, which with the available information cannot be reliably determined.
During the years 2016 and 2017, three complementary documents to the RTR with clarifications on regula- tory methodologies were published, and by the end of 2017, a Public Consultation was published by ERSAR, no. 05/2017 of the "Draft Tariff Regulations of the Urban Waste Management Service", after which a period for submission of contributions to the consultation was held between 07 November and 20 Decem- ber 2017. The changes foreseen in this document are very significant, changing conceptually the current regulatory model. The EGF Group's dealers submitted their statements in a timely manner to the document proposed by the Regulator and look forward to the results of the EGF Group.
During 2018, a Review of the RTR, Regulation 52/2018 of 23 January, was published by ERSAR, which, taking account of the experience of the first regulatory period, sought to make some adjustments to the RTR in order to simplify, relax and clarify some of its provisions. The review of the RTR also required the revision and adaptation of the reporting models. Thus, in 2018, two of the Supplementary Documents were approved and revised, namely:
(a) Regulation 222/2018, as published in the Diário da República on 13 April (1st Supplementary Document) with the purpose of clarifying and adapting concepts relating to the presentation of the Forecast Regulatory Accounts to the new RTR, with the previous Supplementary Document 1, Regulation 817/2016, of 18 Au- gust, being revoked.
(b) Regulation 395/2018, as published in the Diário da República on 29 June (3rd Supplementary Docu- ment), which established mechanisms that reward good performances with the objective of increasing environmental and economic gains.
Taking into account the impact on the company's activity resulting from ERSAR's decisions on permitted income and regulated tariffs for the 2016-2018 and 2019-2021 regulatory periods, they were the subject of a special administrative action with a request for impugnation at the Court by part of the Company, so its outcome is uncertain at this date.
36. INFORMATION ON EGF SUBGROUP CONCESSION CONTRACTS
Exclusive concessions for a period of 19 years, ending in 2034, for operation and management in the areas of the Algarve, South of the Tagus, Leiria, Central Coast, Beira Alta, North Central, Vale do Lima and Baixo Cávado, South Douro, North Alentejo, Vale do Minho and Lisbon and West, under a public service regime, of the multi-municipal waste treatment and selective collection system was awarded to the subsidiaries of the EGF group through the execution of the reformulated concession contract, on 30 September 2015.
The activities that are the subject of the concession include the treatment of municipal waste generated in the areas of the municipalities concerned, including its recovery and the provision of by-products, as well as the selective collection of municipal waste, with the municipalities being obliged to deliver to the EGF group’s subsidiaries all municipal waste, the management of which falls under their responsibility.
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128 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
The supervision of the concession falls under the remit of ERSAR, which is responsible for setting the tar- iffs to be charged, as well as for the approval of the Regulated Accounts and investment plans of the EGF group subsidiaries.
The aforementioned operation and management also includes the design, construction, acquisition, exten- sion, repair, renovation, maintenance and optimisation of works and equipment necessary for the exercise of the activity of the concessionaires.
The concession bases establish that the EGF group subsidiaries have as their main activity the operation and management of the multi-municipal waste system, including the treatment of municipal waste resulting from undifferentiated collection and the selective collection of municipal waste, including sorting, and as complementary activities, activities that, while they do not fall within the main activity, use assets related to it, allowing optimisation of the respective profitability. The exercises of complementary activities depends on the authorisation of the grantor, preceded by opinions from the Competition Authority and the ERSAR.
The following shall be considered as concession-related assets:
- Infrastructure relating to the treatment and recovery of undifferentiated and selective municipal waste, as well as the assets used in the selective collection of municipal waste: transfer stations, eco-centres, pro- cessing, sorting and recovery centres and respective accesses, associated infrastructure, landfills, recy- cling bins and waste transportation means;
- The equipment necessary for the operation of the infrastructures and for the monitoring and control of their operation;
- All works, machines and equipment and respective accessories used for the receipt and treatment of waste, the maintenance of equipment and the management of the multi-municipal system not mentioned above;
- The equipment, machinery, vehicles, apparatus and respective accessories used for the selective col- lection of municipal waste.
Additionally, the following are also considered assets allocated to the concession:
- Properties acquired through private law or through expropriation for the deployment of infrastructure;
- The exclusive rights of intellectual and industrial property owned by the concessionaires;
- Other assets and rights related to the continued operation of the concession, namely labour, works, leasing and services.
The subsidiaries of the EGF group must prepare and maintain the inventory of the assets and rights allo- cated to the concession, and must annually send to ERSAR detailed information about them, as well as any write-offs.
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SUMA · Consolidated Annual Accountss 2019 | 129 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 At 31 de December(Amounts de 2019 expressed (Amounts expressed in euros) in euros)
During the term of the concession, the subsidiaries of the EGF group are obliged to maintain the proper functioning, conservation and safety of the assets and resources allocated to the concession, making all necessary repairs, renovations and adaptations for the maintenance of the assets under the required tech- nical conditions.
The subsidiaries of the EGF group retain the right to operate the assets assigned to the concession until its termination. The assets assigned to the concession may only be used for the purpose provided for in the concession. On the date of termination of the concession, the assets allocated to it shall revert to an Inter- municipal Entity, Association of Municipalities, the group of user Municipalities, or the State, through the exercise of the respective option right and the payment to the concessionaire, pursuant to the conditions laid down in the Bases and in the concession contract, of compensation corresponding to the net book val- ue of those assets. The remuneration regime of the concession is based on the recognition of the revenues allowable to the Concessionaires, to be reflected in the tariffs to be applied to the users of the system. The Concessionaires are responsible for the risks inherent to the concession under the terms of applicable legislation, assuming the respective operational risks. The company is responsible for obtaining the necessary funding for the development of the subject of the concession, in order to comply fully and in a timely manner with the obli- gations assumed under the concession contract, assuming the respective investment and financing risks.
The revenues allowed annually to the EGF group subsidiaries, under the activity under concession, are de- fined by the ERSAR for a time frame of three to five years (“Regulatory period”).
The regulatory model is established by the ERSAR and is based, inter alia, on the following assumptions:
- Eligibility of operating costs, for the purpose of determining permitted revenue, by reference to a sce- nario of productive efficiency of the operation and management of the multi-municipal system;
- Remuneration of capital based on weighted average cost, with parameters defined in reference to mar- ket values and performance of comparable representative entities;
- Definition of an asset base consisting of assets allocated to the concession, as an incidence of return on capital;
- Adoption of mechanisms to encourage efficiency;
- Appropriate impact on permitted revenue of the differences recorded between estimated quantities and quantities of municipal waste delivered to the EGF group subsidiaries.
Additionally, the definition of the operating cost base must take into account its effective control by the EGF Group subsidiaries, installed technologies and capacities, as well as fluctuations in demand.
Accordingly, the tariffs to be applied to users must provide the EGF group subsidiaries with the revenues al- lowed under the terms of the previous bases and correspond to the result of the division of the revenues al- lowed annually to the concessionaires by the estimated levels of consumption for that year.
The concession contract in effect as of 1 January 2016 allows a contractual balance under the conditions of efficient management, promoting a more rational investment and greater operational efficiency through the recognition of the costs of investment, operation and maintenance the adequate remuneration of the assets allocated to the concession, to be reflected in the tariffs applicable to the EGF Group subsidiaries, which al- low operating costs to be recovered and a certain remuneration on the assets to be obtained.
The concession may be terminated by agreement between the parties, by rescission, by resumption of con- trol and by expiry of the term. Upon termination of the concession, all assets and resources allocated to it shall be transferred to the municipalities or to the State.
The concession agreement may be terminated by the grantor if any of the following situations occurs, hav- ing a significant impact on the concession operations: deviation from the purpose of the concession; pro-
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130 | SUMA · Consolidated Annual Accounts 2019 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 (Amounts expressed in euros) At 31 de December de 2019 (Amounts expressed in euros)
longed discontinuation of operations due to a reason attributable to the EGF group subsidiaries; repeated opposition to the exercise of supervision or repeated disobedience to the determinations of the grantor or, further, systematic non-observance of the laws and regulations applicable to the operation; refusal to carry out proper maintenance and repairs on infrastructure; repeated collection of values higher than those es- tablished in the concession contracts and in contracts with the users; dissolution or insolvency of the con- cessionaires; sublease of the concession or unauthorised sub-concession; unauthorised disposal of shares in the concessionaires’ capital; encumbrance of shares in the concessionaires’ capital in breach of the pro- visions of the concession contract; unauthorised increase or reduction, where applicable, in the conces- sionaires’ share capital; failure to provide collateral or renewal of the respective value under the terms and deadlines established; and refusal of the concessionaires to resume the concession, or where this proves impossible.
The grantor may resume control of the concession, assuming the direct management of the public service granted, whenever reasons of public interest so justify and at least two-thirds of the contractual term has elapsed, upon prior notice given to the EGF group subsidiaries, by means of registered letter with acknowl- edgement of receipt, at least one year prior to the date on which the resumption of control takes effect.
Upon resumption of control, the EGF group subsidiaries are entitled to indemnity that must take account of the book value at the date of resumption of control of the reverted assets, the value of existing credits, as well as the value of any loss of earnings, taking into account the number of years remaining until the end of the concession.
37. EVENTS AFTER THE BALANCE SHEET DATE
The World Health Organization declared, on 30 January 2020, the international public health emergency situation of COVID-19 and, on 11 March 2020, considered COVID-19 as a pandemic.
Following this declaration, a series of measures aimed at citizens, companies and public and private enti- ties, regarding the epidemiological infection by COVID-19, have been approved and published.
At the time of writing this report, it is not possible to quantify the extent of the impact of this pandemic on the organisation, however, and in accordance with the recommendations issued by the Health Department and WHO, the company has adopted the following preventive measures: Preparation of contingency plan;
Reinforcement of the personal protective equipment of employees including masks, gloves, alcohol gel, disinfectants, protective suits, closing bathhouses and reinforcing the cleanliness of spaces;
Adoption of a rotating teleworking regime allowing compliance with the rules defined by the Health De- partment for offices and common spaces;
Alteration of production routines, namely the existence of teams working in a rotating system, guaran- teeing, in case of transmission, that there is a reserve team;
Among others.
In parallel, we promote to the competent entities:
Use of default letters for the period of 6 months, from 1 April 2020 to 30 September 2020, applicable to all financing except commercial paper.
Elaboration of candidacy for the Specific Line of COVID-19 Support for the eligible companies of the SUMA group, still under analysis.
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SUMA · Consolidated Annual Accounts 2019 | 131 SUMA · Serviços Urbanos e Meio Ambiente, S.A. and its Subsidiaries SUMA – SERVIÇOS URBANOS E MEIO AMBIENTE, SA AND ITS SUBSIDIARIES Notes to Consolidated Financial Statements NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 At 31 de December(Amounts de 2019 expressed (Amounts expressed in euros) in euros)
Regarding the activities of the group, there are some activities that are a guarantee of public health, while others are not, with regard to activities that are not a guarantee of public health, these are dependent on the companies and the activities developed by them, and therefore, in this type of activity it is expected that there will be a sharp drop in activity, however and not least the main activity of the group, has not yet suf- fered a major impact related to this phenomenon, so we can conclude that at the level of consolidated mar- ket there are no significant impacts.
THE CERTIFIED ACCOUNTANT THE BOARD OF DIRECTORS
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132 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations
MYTH: Working remotely reduces mandatory weekly hours.
Working from home creates more balance and removes having to deal with public transport, traf c and commuting. It also makes responding more exible and allows this to be adapted it to peak hours.
Todos ganham:
+ energy
+ health
- stress
#letsshifttheparadigm
©SUMA Opinions and Certi cations
134 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations
SUMA · Consolidated Annual Accounts 2019 | 135 Opinions and Certi cations
136 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations
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CDD*A'!,D!E*-.,0!=0@'(!25'!-*0?8'!('?*-2(/2*,0!/0@!8'?/8!7'(-,0!0=1.'(!; SUMA · Consolidated Annual Accounts 2019 | 137 Opinions and Certi cations 138 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations SUMA · Consolidated Annual Accounts 2019 | 139 Opinions and Certi cations 140 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations ! & & & ! ! ! ! 5;!$%&!<=),=>$!#-!>$,!+=$>&,:!$%&!'=<&)?>,#)@!8#()+!#A$(>;&+!-)#B!$%&!8#()+!#-!C>)&D$#),:!E)#=$#)!(**!>;-#)B($>#;!(;+!D*()>->D($>#;,!)&F=&,$&+!(**#G>;H!(! <)#<&)!=;+&),$(;+>;H!(;+!(,,&,,B&;$!#-!$%&!+&?&*# SUMA · Consolidated Annual Accounts 2019 | 141 Opinions and Certi cations 142 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations Certificação Legal das Contas Relato sobre a auditoria das demonstrações financeiras consolidadas Opinião com reservas Auditámos as demonstrações financeiras consolidadas anexas da Suma – Serviços Urbanos e Meio Ambiente, S.A. (o Grupo), que compreendem o balanço consolidado em 31 de dezembro de 2019 (que evidencia um total de 697.531.318 euros e um total de capital próprio de 172.554.226 euros, incluindo um resultado líquido de 7.425.253 euros), a demonstração consolidada dos resultados por naturezas, a demonstração consolidada das alterações no capital próprio e a demonstração consolidada dos fluxos de caixa relativas ao ano findo naquela data, e as notas anexas às demonstrações financeiras consolidadas que incluem um resumo das políticas contabilísticas significativas. Em nossa opinião, exceto quanto aos possíveis efeitos da matéria referida na secção “Bases para a opinião com reservas”, as demonstrações financeiras consolidadas anexas apresentam de forma verdadeira e apropriada, em todos os aspetos materiais, a posição financeira consolidada da Suma – Serviços Urbanos e Meio Ambiente, S.A. em 31 de dezembro de 2019 e o seu desempenho financeiro e fluxos de caixa consolidados relativos ao ano findo naquela data de acordo com as Normas Contabilísticas e de Relato Financeiro adotadas em Portugal através do Sistema de Normalização Contabilística. Bases para a opinião com reservas Nos termos da legislação em vigor e conforme divulgado na Nota 21 do anexo às demonstrações financeiras consolidadas, o Grupo tem a responsabilidade de selagem e monitorização dos aterros em exploração. Em 31 de dezembro de 2019, a provisão constituída para o efeito ascende a 6.180 milhares de euros. Até à presente data, a informação disponível referente ao saldo desta provisão não é suficiente para nos permitir concluir quanto à razoabilidade da responsabilidade registada para fazer face às obrigações presentes existentes e respetiva movimentação do exercício. Consequentemente, não nos é possível concluir sobre o efeito desta situação nas demonstrações financeiras consolidadas do Grupo em 31 de dezembro de 2019. A nossa auditoria foi efetuada de acordo com as Normas Internacionais de Auditoria (ISAs) e demais normas e orientações técnicas e éticas da Ordem dos Revisores Oficiais de Contas. As nossas responsabilidades nos termos dessas normas estão descritas na secção “Responsabilidades do auditor pela auditoria das demonstrações financeiras consolidadas” abaixo. Somos independentes das entidades que compõem o Grupo nos termos da lei e cumprimos os demais requisitos éticos nos termos do código de ética da Ordem dos Revisores Oficiais de Contas. Estamos convictos de que a prova de auditoria que obtivemos é suficiente e apropriada para proporcionar uma base para a nossa opinião com reservas. PricewaterhouseCoopers & Associados – Sociedade de Revisores Oficiais de Contas, Lda. Sede: Palácio Sottomayor, Rua Sousa Martins, 1 - 3º, 1069-316 Lisboa, Portugal Receção: Palácio Sottomayor, Avenida Fontes Pereira de Melo, nº16, 1050-121 Lisboa, Portugal Tel: +351 213 599 000, Fax: +351 213 599 999, www.pwc.pt Matriculada na CRC sob o NIPC 506 628 752, Capital Social Euros 314.000 Inscrita na lista das Sociedades de Revisores Oficiais de Contas sob o nº 183 e na CMVM sob o nº 20161485 PricewaterhouseCoopers & Associados – Sociedade de Revisores Oficiais de Contas, Lda. pertence à rede de entidades que são membros da PricewaterhouseCoopers International Limited, cada uma das quais é uma entidade legal autónoma e independente. SUMA · Consolidated Annual Accounts 2019 | 143 Opinions and Certi cations 144 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations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SUMA · Consolidated Annual Accounts 2019 | 145 Opinions and Certi cations 146 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations Ênfase Conforme divulgado na Nota 10 do anexo contendo as notas explicativas, as decisões da ERSAR sobre os proveitos permitidos e tarifas reguladas para o período regulatório 2019-2021 da subsidiária Grupo EGF foram objeto de ação administrativa especial, com pedido de impugnação em sede de Tribunal, por parte da respetiva subsidiária. Tendo em consideração a incerteza quanto ao desfecho deste litígio e enquadramento regulatório associado, chamamos a atenção para os potenciais impactos que esta situação poderá ter no desenvolvimento da atividade futura operacional e financeira da subsidiária Grupo EGF, e consequentemente, na valorização dos ativos intangíveis do Grupo. A nossa opinião não é modificada em relação a esta matéria. Responsabilidades do órgão de gestão e do órgão de fiscalização pelas demonstrações financeiras consolidadas O órgão de gestão é responsável pela: a) preparação de demonstrações financeiras consolidadas que apresentem de forma verdadeira e apropriada a posição financeira, o desempenho financeiro e os fluxos de caixa do Grupo de acordo com as Normas Contabilísticas e de Relato Financeiro adotadas em Portugal através do Sistema de Normalização Contabilística; b) elaboração do relatório de gestão nos termos legais e regulamentares aplicáveis; c) criação e manutenção de um sistema de controlo interno apropriado para permitir a preparação de demonstrações financeiras isentas de distorção material devido a fraude ou erro; d) adoção de políticas e critérios contabilísticos adequados nas circunstâncias; e e) avaliação da capacidade do Grupo de se manter em continuidade, divulgando, quando aplicável, as matérias que possam suscitar dúvidas significativas sobre a continuidade das atividades. O órgão de fiscalização é responsável pela supervisão do processo de preparação e divulgação da informação financeira do Grupo. Responsabilidades do auditor pela auditoria das demonstrações financeiras consolidadas A nossa responsabilidade consiste em obter segurança razoável sobre se as demonstrações financeiras consolidadas como um todo estão isentas de distorções materiais devido a fraude ou erro, e emitir um relatório onde conste a nossa opinião. Segurança razoável é um nível elevado de segurança, mas não é uma garantia de que uma auditoria executada de acordo com as ISAs detetará sempre uma distorção material quando exista. As distorções podem ter origem em fraude ou erro e são consideradas materiais se, isoladas ou conjuntamente, se possa razoavelmente esperar que Certificação Legal das Contas Suma – Serviços Urbanos e Meio Ambiente, S.A. 31 de dezembro de 2019 PwC 2 de 4 SUMA · Consolidated Annual Accounts 2019 | 147 Opinions and Certi cations 148 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations ! ! ! ! ! ! ( 3*%,0/)*&)'4+1#/%/) ! <2!()2+3,2#(!)/!V,*#!CF!,4!*$#!%//#P!+,/*%)/)/1!*$#!#P.3%/%*,70!/,*#2=!YT5 SUMA · Consolidated Annual Accounts 2019 | 149 Opinions and Certi cations 150 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations influenciem decisões económicas dos utilizadores tomadas com base nessas demonstrações financeiras. Como parte de uma auditoria de acordo com as ISAs, fazemos julgamentos profissionais e mantemos ceticismo profissional durante a auditoria e também: a) identificamos e avaliamos os riscos de distorção material das demonstrações financeiras consolidadas, devido a fraude ou a erro, concebemos e executamos procedimentos de auditoria que respondam a esses riscos, e obtemos prova de auditoria que seja suficiente e apropriada para proporcionar uma base para a nossa opinião. O risco de não detetar uma distorção material devido a fraude é maior do que o risco de não detetar uma distorção material devido a erro, dado que a fraude pode envolver conluio, falsificação, omissões intencionais, falsas declarações ou sobreposição ao controlo interno; b) obtemos uma compreensão do controlo interno relevante para a auditoria com o objetivo de conceber procedimentos de auditoria que sejam apropriados nas circunstâncias, mas não para expressar uma opinião sobre a eficácia do controlo interno do Grupo; c) avaliamos a adequação das políticas contabilísticas usadas e a razoabilidade das estimativas contabilísticas e respetivas divulgações feitas pelo órgão de gestão; d) concluímos sobre a apropriação do uso, pelo órgão de gestão, do pressuposto da continuidade e, com base na prova de auditoria obtida, se existe qualquer incerteza material relacionada com acontecimentos ou condições que possam suscitar dúvidas significativas sobre a capacidade do Grupo para dar continuidade às suas atividades. Se concluirmos que existe uma incerteza material, devemos chamar a atenção no nosso relatório para as divulgações relacionadas incluídas nas demonstrações financeiras ou, caso essas divulgações não sejam adequadas, modificar a nossa opinião. As nossas conclusões são baseadas na prova de auditoria obtida até à data do nosso relatório. Porém, acontecimentos ou condições futuras podem levar a que o Grupo descontinue as suas atividades; e) avaliamos a apresentação, estrutura e conteúdo global das demonstrações financeiras consolidadas, incluindo as divulgações, e se essas demonstrações financeiras representam as transações e acontecimentos subjacentes de forma a atingir uma apresentação apropriada; f) obtemos prova de auditoria suficiente e apropriada relativa à informação financeira das entidades ou atividades dentro do Grupo para expressar uma opinião sobre as demonstrações financeiras consolidadas. Somos responsáveis pela orientação, supervisão e desempenho da auditoria do Grupo e somos os responsáveis finais pela nossa opinião de auditoria; e g) comunicamos com os encarregados da governação, entre outros assuntos, o âmbito e o calendário planeado da auditoria, e as conclusões significativas da auditoria incluindo qualquer deficiência significativa de controlo interno identificada durante a auditoria. A nossa responsabilidade inclui ainda a verificação da concordância da informação constante do relatório de gestão com as demonstrações financeiras consolidadas. Certificação Legal das Contas Suma – Serviços Urbanos e Meio Ambiente, S.A. 31 de dezembro de 2019 PwC 3 de 4 SUMA · Consolidated Annual Accounts 2019 | 151 Opinions and Certi cations 152 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations ! ! ! ! ! ! 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'''' '''''''''' ''''''''''''365%'7'3),*#81.'9,:%01.')';)#1'<5:#)04)='3<' >?'@)$)5:),'AB?C'' ' ' ' ' ' ''' ' ' ''' '''''''D+E'>'1"'F" " SUMA · Consolidated Annual Accounts 2019 | 153 Opinions and Certi cations 154 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations Relato sobre outros requisitos legais e regulamentares Sobre o relatório de gestão Dando cumprimento ao artigo 451.º, n.º 3, al. e) do Código das Sociedades Comerciais, somos de parecer que o relatório de gestão foi preparado de acordo com os requisitos legais e regulamentares aplicáveis em vigor, a informação nele constante é concordante com as demonstrações financeiras consolidadas auditadas e, tendo em conta o conhecimento e apreciação sobre o Grupo, não identificámos incorreções materiais. 1 de junho de 2020 PricewaterhouseCoopers & Associados - Sociedade de Revisores Oficiais de Contas, Lda. representada por: Hugo Miguel Patrício Dias, R.O.C. Certificação Legal das Contas Suma – Serviços Urbanos e Meio Ambiente, S.A. 31 de dezembro de 2019 PwC 4 de 4 SUMA · Consolidated Annual Accounts 2019 | 155 Opinions and Certi cations 156 | SUMA · Consolidated Annual Accounts 2019 Opinions and Certi cations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`'/#!C=!EFEF! ! U7)+#A%*#7$,'2#W,,.#72!a!<22,+)%(,2!b!5,+)#(%(#!(#!T#&)2,7#2!X4)+)%)2!(#!W,/*%2=!c(%N!! 7#.7#2#/*#(!:0^! ! d'1,!;)1'#3!U%*7e+),!D)%2=!TXW! " " " ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !""#$#%&'()*#)+),-.'!/#0#10'10'2#0%0$#%&'34%4)5)04.' '''' '''''''''' ''''''''''''365%'7'3),*#81.'9,:%01.')';)#1'<5:#)04)='3<' >?'@)$)5:),'AB?C'' ' ' ' ' ' ''' ' ' ''' '''''''D+E'F'1"'F" SUMA · Consolidated Annual Accounts 2019 | 157 158 | SUMA · Consolidated Annual Accounts 2019 Minutes of the General Meeting MYTH: Teleworking transfers the costs of companies to workers. Studies indicate that teleworkers' cost savings are higher than the usual costs they incur when working outside the home. Remote work ensures: - travel costs (fuel, maintenance, parking) - spending on eating out #letsshifttheparadigm ©SUMA Minutes of the General Meeting 160 | SUMA · Consolidated Annual Accounts 2019 Minutes of the General Meeting SUMA · Consolidated Annual Accounts 2019 | 161 Minutes of the General Meeting 162 | SUMA · Consolidated Annual Accounts 2019 Minutes of the General Meeting SUMA · Consolidated Annual Accounts 2019 | 163 Minutes of the General Meeting 164 | SUMA · Consolidated Annual Accounts 2019 Minutes of the General Meeting SUMA · Consolidated Annual Accounts 2019 | 165